The official summary "Our panelists pull out all their knowledge and create a world before your very eyes, with assistance from R. Cat Conrad on the white board." as it turned out, misrepresented the format of the panel.
Mark Finn. I thought we were going to have to build a world.
A panelist. No, no, make them work!
So it was the audience that built the fantasy world, not the panelists. The latter provided feedback in a form of wisecracks (Mark Finn), by coaxing the audience to think through the issues involved in building a fantasy world (Gloria Oliver) and seek out plot devices that would turn the raw fantasy product into an actual story material (Caroline Spector).
One thing the audience didn't need was to be prodded into activity. The topic was selected cleverly or fortuitously enough to send the audience's imagination into overdrive.
If you want to know what story ideas and themes the audience came up with without reading their entire thought process, click here for the summary.
Pictures from Armadillocon 2004 are available in my photo gallery.