As you noted, children figure out pretty young whether they are any good at something. If they are good, they gravitate toward more competitive venues and they want competition to test themselves. If not, they gravitate to what is often referred to as recreational leagues.

I am not sure "participation trophies" make much sense, but I am certainly supportive of children who are not interested in competitive sports enjoying the benefits of "sport". In fact, I would go so far as to say one of our nation's "educational failures" is not teaching young children to embrace a "life" sport at a young age even if they are terrible at it for the health benefits.

I was good enough to be a scholarship football athlete, but when it came to basketball, I was more suited to YMCA recreational teams.

As an adult, I have coached soccer teams (though I never played soccer outside of gym) and baseball teams (though I only played the sport in gym and on the "sandlot".

With this as background, I might suggest something other than a "participation" trophy (since, they tend to get discarded as taking up space and many children view them as "lame".

Most youth teams have an end of the season dinner (if they don't, they should). At the dinner, giving each child a team "patch" that can be ironed on a sweatshirt or t-shirt (if you can afford more, a team sweatshirt or t-shirt with the team logo on it) can achieve the same goal. It makes every child feel like part of something bigger than themselves.

It tells people they stuck with something. That says a lot. Young children want to identify with a group, so identifying as part of a team seems a good way to build self-esteem. It doesn't convey anything other than the truth, that the child stuck with their team through the whole season... but that says a lot.