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As an example if we wanted to increase participation on the Ethereum stackexchange, we could set up a contract to make micro payments out to stack members based on reputation/badges.

This would only make sense in a no-fee or extremely low fee scenario. Is Raiden the correct way to approach such a solution or are there other viable existing alternatives on ethereum?

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This would work using Raiden Network, check out the API documentation to get some ideas on interacting with Raiden. If you have direct channels to the users then there wouldn't be any fees (although opening a direct channel is an on-chain interaction). It'd be in the scenario where if there's no direct path that you might have to pay a very low amount of fees.

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