Isn't there a whole industry that revolves around paying people to provide you with their trading strategies? How is that considerably different than what's happening on Collective2?
Having a good strategy doesn't mean you have the money to actually trade on it. Or that you can slowly build up your trading bankroll using the same strategy.
Then there's strategies that only yield modest returns. Why not make some money on top of that by renting it out? If you let a dozen people use your strategy, does acting on that information give you much of an advantage? I would guess that depends on how much money those people are trading on your strategy.
I would also guess there aren't many big players renting strategies on Collective2. It's an interesting concept and I think the fact that they've been active since 2003, somewhat validates the idea.
The best thing about it seems to be the ease of using an automated trading agent. I don't know how easy it is to do that elsewhere, but one reason to put your strategy on Collective2 (I'm guessing you can keep it private) would be to use their automation facilities.