I review for others because others have done 1) for me. But I'll never review for Elsevier, and lately I've had the luxury of reviewing for the most cited of open journals (by operating bioRxiv, and accepting direct submissions from it, I claim that Genome Research is "close enough").
It makes me very happy that this is possible (my CV has not suffered for only publishing as first author, and whenever possible as senior or co-senior, in fully open journals). I'm pretty sure this wasn't possible for most people a few short years ago. That engenders optimism about the future of scholarship, for me at least.
Hopefully you as well.
On personal research, I've used it for exactly this, but since what I've seen was only preprints, I've often wondered about the final version. It looks like I'm not alone.[1] Do many or any of the arXiv papers get updates with the improvements that come from peer reviews? Is there a need for arXiv for finals or do publishers demand exclusives on finals?
[1] http://mathoverflow.net/questions/41141/should-i-not-cite-an...
Also, since you submit manuscripts to most journals in TeX, there's very little extra work involved in uploading the updated files also to arxiv. You maybe miss the copy editor's grammar corrections etc., but those are almost without exception unimportant --- also, more often than not, the copyediting by the publisher introduces errors not present in the original manuscript.
If one were to build a system along that line, meant to replace prestigious academic journals of today, of course it would be gamed. But isn't the general consensus that the current system already is being gamed and usually at expense of the researchers doing valuable research and the public at large?
(and in anycase, most subfields just have a couple thousand individuals involved at the PI level, who frequently interact at conferences, went to the same schools, shared an advisor, etc. So there doesn't really need to be an elaborate scheme to verify someones credentials. Chances are two individuals are already aware of eachothers reputations, or at least know some third party who is).
http://quantum-journal.org/announcing-quantum/ http://www.nature.com/news/open-journals-that-piggyback-on-a... https://www.aps.org/publications/apsnews/201602/arxiv.cfm