1) It seems like it encourages people who are more passionate about having a startup than it does people who are passionate about their particular idea.
2) Is selecting a RFS as your startup's core going to help or hurt an applicant? I suppose this is something we won't know the answer to until after we see the scope of this round's applications (or get a more general approximation for them). If the RFS is popular, you're going to have half your applicants with similar start-ups. Assuming you select your classes such that you have some measure of diversity in your portfolio, then ultimately groups doing a RFS will be at a disadvantage (since they'll be competing against everyone who did that RFS for a few slots, instead of competing generally), and the program's popularity will dwindle. Note that this assumes there are only a handful of RFS options.