As an entrepreneur, you're going to get rejected over and over again. Why should that change how you approach potential future rejections? As investors, YCombinator wants to see that you won't give up in the face of setbacks...you are now giving up in the face of setbacks. The value of a YCombinator investment does not change depending on whether they have chosen you or not. Why has your decision whether to pursue it changed?
(Full disclosure: I've been rejected 4 times from YCombinator. Also rejected from FriendFeed, LikeALittle, Twitter, and Harvard. Stupidly passed up DropBox. Accepted by Amherst and Google. My opinion of any of them has not changed based on whether or not they rejected me. I haven't applied to YC since SFP08, but that's because my interests at present lie more in technology than in startups, and other opportunities have been available to me in that area. That does not mean I would not apply to YC again should I have a burning desire to start a company.)
YCombinator's application is not hoop-jumping. It's training. These are questions that you should be asking yourself about your idea anyway, regardless of whether you seek YC funding. Big-time VC funds will ask you the same questions, except that they require a personal introduction to even get to that point. Heck, customers will ask you the same thing, except that they want you to show them the answers through your product instead of tell them through an application form.
Also, the value of YCombinator is not in the $20K. It's in the introductions they give you, and how hard they work to put you in front of big-money investors. We saw that a couple days ago with the e-mail exchange where PG tried to get Union Square Ventures to invest in AirBnB. Most investors won't even look at you without a personal introduction from someone they trust.
Yes, VC's ask a lot of questions. Even harder ones. They even want very long business plans. And more. The difference is VC's are going to give you MILLIONS of dollars if you jump through all their hoops. Not just a little more than what would pay your relocation and rent while you move to California. I trust you can see the difference.
Also, are you sure you read/reread my post? I clearly said in there "Yes the intros are a good perk, but if you truly have something, you will get there regardless." So I'm wondering why you bring up the intros as a perk beyond the money as I already pointed that out in my post.
But as has been mentioned countless times, YC cares about founders, not ideas. And if you come across as someone that will be difficult to work with, it will make any business transaction (funding not excepted) that much less pleasant and that much less likely to happen.