There was half a bottle of the stuff in my first place winning sauce at rudgwick
As long as it's balanced well in the flavour profile you're ok. An alternative to liquid smoke is smoking onions, garlic and chilli then using them in the sauce. But if you can't be arsed liquid smoke is fine as long as you use it sensibly.
In terms of judging, you can get marked down for liquid smoke even if you smoke your sauce instead of using it. As has happened to someone this year, if a sauce is overs smoked it will taste acrid, if you use too much liquid smoke, same effect.
I'd suggest, perfecting a sauce the way you like it, smoked or cooked on the hob, as long as you're happy with it then it's all good.