I'd be fine with it. I think later on when you've got dozens (or hundreds) of employees and a limited options pool, it might become unfeasible. But right now, I'd have no problem with paying an employee only equity. Even tiny companies like us have valuations that are, well, non-zero, so it's not like some employee can conspire to get founder equity status by simply not taking cash.

Why, know someone who will take only equity? Send him/her our way if so..;)