I wouldn't say that grad med is more competitive than undergrad, if anything, its less competitive. There are 12 grad med schools in Australia (3 in Victoria - Melb, Monash and Deakin) compared to 9 undergrad (i think) in Australia, with only one undergrad course in Vic, this being at Monash. Melbourne will be releasing their entry requirements early next year, but according to one of the people designing the course, it will be GPA (5.5-6.0), GAMSAT and interview.
Of course, yes, there is the risk that you may not meet these requirements and won't be accepted, but you need to ask yourself how badly you want to pursue a career in Medicine if you don't get into Monash. In my opinion, if you were offered a spot at Monash, you would probably be better off taking that because of the certainty of it. However, if you are confident you can make the entry requirements or you are unsure if Med is exactly what you want to do, then Biomed may be a better option because it's a bit more flexible.
As for Medicine interstate, again it depends how badly you want to do it, and whether you are happy to leave family and friends to pursue the career, or whether you would prefer to take the biomed option and stay in your home state. It really is a personal decision that you would have to make if that opportunity came.