You're right, it isn't a game, its a sum of money that isn't too far off the amount of money this person will have earned a year out from graduation.
If the coach is offering a certain amount of money now, but saying more will be available should you hit some benchmark, that money is either on the table right this minute, or the OP hitting that mark means someone else is coming off scholarship/they're rescinding an offer to someone else. The OP said their spring track times make the NXN goal very realistic and attainable, which the Coach should also know, which means they have a reasonable expectation they have to have that scholarship amount available. This sounds like the exact type of situation where the coach is more worried about what their recruiting class looks like to outside observers, so if he can't get a 'top XX at NXN' runner, he'll get 2 recruits instead..
OP, absolutely be honest and upfront with the coach. Tell them their school is your #1 choice before monetary considerations. Tell them they have the lowest scholarship offer of any school you're looking at, and certainly tell them you are confident in your ability to hit that NXN goal, but you aren't comfortable putting 20k on the line when catching a cold could forfeit it.
Scholarships being conditional on specific race results (not talking about times, but place finishes) isn't unheard of, but its definitely not standard operating procedure for most quality programs.