The idea is that reddit was much better in its first year, when the community was smaller. A social news site seeded by Paul Graham and Paul Graham loyalists (like reddit in its first year) should have better than average discussions. If the site accidentally gets too big and the discussion degrades, there's no problem, PG gets to sell the site and the core community moves to a new clone site. Or maybe by then someone will come up with an elegant solution for making the community of a big social news site not suck.
No more "eternal september" effect.
I also wonder if there are any lessons to be learned from metafilter, which uses a $5 USD joining fee, plus rate limiting (one post per day to main site, one question per week to ask).