Unfortunately, I think this is a case of "I'll believe it when I see it."
Applying to Y Combinator might be good for them, if for no other reason than the support and drive to actually complete the project. Maintaining that level of visibility while getting things done would crush the team, but I think YC could help with that.
The fact that the few who succeed without raising money tend to be famous on that account is evidence of how rare that combination is.
If money were of no concern and you were solely interested in maximizing their chances of success would you give each Y Combinator company 10 or 100 times as much money?
There probably is no ideal solution, different teams flourish under different conditions.
You see I thought 10k was a good idea - a little cash to keep them going over the summer while they build something.
I mean, I don't think they have entirely the right solution - but it's interesting enough that I would happily have funded them 10k to see what comes of it.
Several hundred thousand is another matter - that can become a distraction. Look at other startups that recieve disproportionate funding and lots of hype then peter out.