I'm with a community light opera company and occasionally we get opportunities to sing (for money) at events outside of our regular annual show. There is often limited space, so we can't take everybody who wants to sing. There is also a small contingent of longtime chorus members who have basically been given a pass to be in the big shows (even though everyone has to audition), but whose voices would stand out in a smaller setting, and not in a good way. We have tried inviting individual people to participate, but once word gets out the company is upset that the opportunity wasn't made available to everyone. On the other hand, we want the best voices to represent our group. How do we handle this?

In regards to chorus members not knowing their own lack of skill . . .

Have you ever tried having them listen (not watch) a recording of the chorus singing and point out the flaws?  It really helps people to know what needs improvement and how they differ from your ideal singer.

It would also be good when doing auditions that you make an audio recording of different people together to listen to the blend.  I know many a "solo" singer who would be horrible in a small group because they can't breathe properly and can't blend their voices with others.  I also know some powerful singers who can't sight-read and actually sing by listening to others around them--putting them slightly off beat--not really noticeable in a large choir but definitely a problem in an ensemble piece.

For the good of every company, people wishing to be chosen for special parts should also be willing (and tough-skinned enough) to be evaluated.