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Firstly, I agree, the reality of surviving a large number of years at university, without a salary and borrowing athroughout, should not be 'rewarded' with unpaid work. Its just not right.

The hurdle of the part III, however, does require working under the guidance of a registered architect... is there a balance in the mid-ground?

John Mortis makes a very good point, there are a number of great competitions out there, that many currently engaged architects will not have the time and resources that you have to commit to the endeavour.

A large number of competitions are free to enter, or at least not excessively expensive, and allow digital submissions saving the expense on getting boards printed, mounted and encapsulated and then couriered to the destination.

If it was me, maybe work one or two days a week in practice 'to keep your hand in' and spend the rest of the week on your own portfolio of competitions and bids. You never know your employer may let you have access to some resources you wouldn't have on your own...