It would be very interesting to hear from some of our members who have legal expertise.
Personally, since at least one player has to be a participant in not only the "short" main pot, but in each and every side pot (hence a total pot to that player of at least $20), I would say this qualifies. My reasoning has to do with the fact that your 'rules' only say there has to be $20 "in the pot" and the term "pot" is not defined or limited to the main pot in the hand.
If the bad beat is hit and you don't pay, based on these circumstances, is it worth the bad publicity you are going to incur? Especially, since the money in the jackpot isn't house money, but is additional rake dragged from the players? I think not. Do what you think best, but fix your damn rules!!
Chet