Welcome to handicap tournaments. This is ALWAYS the case. Give or take a couple dozen pins.
Every bowler when they start advancing will have a year where their current skill level outscores their book average. That's the year most enter as many handicap tournaments as possible. You are not the only one in that position. But if you continue to do well, bowling way over your book average, the tournament committee may deside to re rate you. So if you are booking at 140 but bowling at a 180 pace they may just decide to bring you into the tournament at 165. They can do that. Usually only winners and high placers are re rated. If you didn't come into the money they don't pay too much attention. Now if you see one person continually winning this handicap tournament ask the committe if they had considered re rating him/her. If they won't do it, and you don't feel like you have a fair enough chance, then don't enter.
And then you have the sandbaggers. The ones that intentionally keep their book averages low so that they can participate in handicap tournaments either locally or not. This year, our association had a hearing and rerated 4 people based on their tournament averages.
But don't get too disheartened. Each tournament is won sometimes by someone bowling way over their head and sometimes not. Just depends. Like you noticed, last month it was won by someone who bowled 20 pins over average, not 50. If there's a lot of people entered, then there's bound to be someone that just gets the night of their life. And with brackets, remember you have to come out of the shoot fighting hard to win that first game. That weeds out the weakest bowlers that day,so of course your chances of getting pitted against hot bowlers the next two steps will happen.
Try not to take it too hard. Try again, its good experience.