There are a number of visual and audio settings that are commonly tweaked by competitive players.
Visuals
Many players in UT2004's old competitive community used the mutator UTComp to force a default player model + a brightskin. This is of course only available on servers using the mutator.
On servers not running the mutator, users can force a default model for all opponents via the User.ini file :
[XGame.xPawn]
PlacedCharacterName=Gorge
PlacedFemaleCharacterName=Rylisa
Only certain models can be forced, and you must play as one of models you force. I believe these are some of the available options:
Males: Gorge, Xan, Malcolm, Brock
Females: Rylisa, Tamika, Sapphire, Enigma, Ophelia
I know many competitive players who would set lower their texture quality to the very lowest, to reduce clutter. I don't believe this was allowed in tournament play, but that would vary by tourny rules.
Audio
On servers with UTComp, many players use CPMA style (damage dependent pitch) hitsounds.
Almost all players turn off their music, and some adjust their ambient volume and roll-off settings in UT2004.ini :
[ALAudio.ALAudioSubsystem]
AmbientVolume=0.125000
RollOff=0.400000
As you increase ambient volume, you can hear locational sounds such lifts and creaky boards more clearly, but there is also more environmental noise such as thunder, water, etc. So, it's a trade-off.
Reducing roll-off is likened to cheating, because decreasing the value decreases the dissipation of sound over distance; sounds travel farther. Competitive servers often use a 'lock roll-off' mutator that limits the value to 0.4 (default is 0.5.)
Other
Check out TweakGuides' UT2004 guide for additional information on configuring your .ini files.
I've had no issues with lag/responsiveness, but this is very hit or miss depending on the user (the same reason why some people use gaming CRTs).
The only downside I've had is that the batteries make the mouse a little heavier, which causes faster fatigue for long periods of gaming.
Also, you run the risk of batteries dying on you in the middle of a frag fest.
Best Answer
Each tournament and competition will have rules specifying what is allowed and what is not.
In the more serious competitions, you do not even use your own hardware.