I guess you could decline any winning monies or Mod Retro based prizes if you won the Jam, if you feel so strongly about Palmer Luckey? He is credited with starting Mod Retro, and the Chromatic, but he's not Mod Retro's CEO, nor does he run or actively work for the company day to day.
I can see why you may not want to be associated with working directly with Palmer Luckey, but Mod Retro is run by, and employs, a lot of people who are passionate and dedicated towards indi-development, the homebrew scene, and the retro game industry as a whole. I think you could make a bold statement by still participating, but declining any reward money or prizes if offered? I doubt if they would be pulled as a sponsor from the Jam.