Do we have to play the full 50 card deck in game 1 like war sideboard?
No.
I believe this is what Torb intends, but we'll have to see how he responds.
The only thing I changed in the rules was the person to send to, so I was hoping you had a grand design plan
Very well, then.
Given 32 players, you would get 8 groups of 4, the top 2 of each group advances to the next set of 4 groups of 4, whose top 2s advances to the next 2 groups of 4, whose top 2s advances to the final group where the winner is the number 1 of that group. I do not expect 32 players, so there will be one less group round with number and size of groups adjusted to match the number of participants with top 2 advancing in each group and each group having 4-6 participants.
To summarize, number of groups per round with 32 players: 8 -> 4 -> 2 -> 1 -> END
The rounds would last 2 weeks each.
The group seeding of subsequent groups will avoid putting players that have already faced one another in the same group first and foremost, secondly a decent balance of number 1s and 2s will attempt to be found, unless this conflicts with the aforementioned point.
Does that sound about right? Perhaps this ought to be included within the OP of the rules.