I'm just guessing here but they likely want to keep ownership of any "professional grade" photos and the 12 inch rule is designed to help them do that. When you register with the marketing department they will likely have you sign an agreement to that effect. I know that at NASCAR racing events they automatically claim ownership of your images (except for personal use). It's printed right on the back of your ticket. You can take all the photos you want. You just can't sell them (without NASCAR's approval).
That said, and depending on what your intentions are and what other lenses you have at your disposal, I might be tempted to leave the 70-300 at home anyway. In a lot of these events, a normal to wide angle lens works better. For good light, I guess I would mount my AFS-18-35mm f/3.5-4.5(FX) on the camera and put my 24-120D f/3.5-5.6 in the bag... just in case.
If the light were poor I might take my 20mm f/1.8, my 50mm f/1.4 and 85mm f/1.8. The 20mm would probably be the lens I would use the most. The 85mm for portraits and the fifty would probably spend most of it's time in the bag.
--Ron
PS... I just looked at their site. Yep, they want to keep the rights to ANY media resulting from their event.
Film & Photo Rights
All film rights are reserved. Commercial use of photos, videos or audio tapes made at the festival without written permission from the marketing department is strictly prohibited. Any cameras with lenses over 12 inches must have prior approval from the marketing department to shoot photos on the Bay Area Renaissance Festival grounds. If you have any questions, please call 813-983-0111.