However, from the founders' perspective they can't have these kinds of negotiations with many early employees. How much equity could they realistically give up to get the key hires (and leave enough for an option pool for later employees)? This is obviously a complicated issue and it would be good to hear a founder talk about how they dealt with it.
Equity for an employee should be viewed as a bonus and nothing more. Equity is a powerful tool for a company, and it shouldn't be parted with so easily. What if you need to raise some (non-dilution) bridge financing? You've limited your options if you've already committed huge equity to employees. It just doesn't make a ton of sense.
Pay market rate and benefits. Hold on to your equity for dear life.
The best strategy is to realize which employees are key to the success of the company and give them proportionately higher equities. Not every early employee deserves a 12-20% even if they're "not just coders".