Now if every site implemented something like this - I suppose that would be recreating pagerank in a way.

Here's an idea to reward high quality posts in a way robust to karma inflation: You could change the criteria for a follow/nofollow decision to use the time a link spends on the front page (e.g. the top 30). High scoring posts stay there for a while, while low scoring posts will drop off quickly.

A similar approach could be used to dynamically set the karma barrier, if you don't want to track the rank of individual posts.