I suppose it depends on where you're flying from; I'm in the Chicago area, but here it's usually always possible to hit around $700-$800, sometimes even $500-$600. NYC is even cheaper (commonly $500-$600). This assumes you book at the right time - about 6 weeks out or a bit less - when the fares become demand-sensitive (most airlines offer a fairly high price until about 6 weeks out for international flights, to capture revenue from less price sensitive consumers who just want to book a safe ticket).
I think there're fewer juniors and seniors because they're not paying for themselves, and so only parents who both have resources and want to spend them on kids travelling to play a game will do so, while masters are spending their own money for the most part.
There's also a lot wider age range for masters - Juniors really aren't going to be highly competitive until maybe 9, so 2-3 years, and Seniors also have only 3 years available, so if there are 100 Juniors 100 Seniors 600 Masters, that's 30ish people per birth year - masters being between 16 and 36 for the most part I suppose. (Speaking as someone well over 36...)
There's no doubt putting this in London will depress American turnout, but I don't think it will significantly reduce the serious players; it will reduce the fringe players. Players who just barely earned an invite, but aren't really going to win. You'll get more of those from Europe and less from the US. I don't know enough about Europe to say if that's going to change the numbers too much, but I suspect it won't be that big of a deal. And having it once in a five year span, say, outside of the US isn't a very high price to pay for us; just skip that year, or save up your travel rewards or whatever for it (I may, though I doubt I'd earn an invite, but my son might be in the same range as yours - could earn an invite if he really tried, I suspect.)