And I think the "space" (sharing stuff/ re-thinking owning/renting) needs a lot of attention.
Related:
* https://neighborgoods.net/ Neighborgoods is currently in private beta right now. They seem to be a social site centered on finding people to borrow/loan/rent stuff in your immediate area for free/small fees. Hopefully they will have an API, and projects like yours could benefit. spots are a bit booked right now, but count me in as an enthusiastic follower if you open source it.
* For a Yahoo! Hack day project, somebody took the Yahoo! Mail API to make Freecycle data available "on the outside." It looks like this was done only as proof-of-concept, and since each Freecycle community is its own list, this might be hard, but I think there is a LOT to gained by scraping the goods out of there.
* Maybe take the eBay reputation data out via API, and display in your system?
A related idea is being done
As far as reputation system, instead of pulling eBay's reputation data, I was hoping to build a sharing-borrowing reputation system. I don't have any reason to think that being a good eBay seller/buyer would make someone a timely and careful borrower/lender.
"Stuff lending" seems like the sort of thing us internet folks could help with, though, which is why I built ShareLocally.
Do you know where the beta of NeighborGoods is starting?
As for monetizing it, since their system will/does support renting/loaning between people, I imagine they can take a cut of that? Maybe membership? (Now i'm just guessing)
I in no way mentioned Neighborgoods as a reason you should stop working on your project, but rather something to validate it! (Yep, I'm one of those polyanna's... :D)
I really do think you should open source it though, or at least big chunks of it, even if you do a hosted service. (I can save the reasons for this for another time.)
As for eBay rep, I don't think it should replace an internal reputation system, but especially in the early goings, what could it hurt? And not just eBay, selective data from as many 3rd party places as possible. Even a Twitter account that's more than 6 months old could make some people (like me) more comfortable loaning certain kinds of things.
And man... I think there's so much wasted cycles on sites like Freecycle and Craigslist free section... basically there is no item "management." Even when stuff is free, so many inquiries on stuff that's gone, or redundant follow-up letters to tell people it's taken, etc. I know your system is a different use-case than give-aways, but I see an overlap in need and purpose, and stuff + relationship management is applicable to multiple situations (and similar demographics of people who like to be resourceful).
As for beta of NeighborGoods, I have an invite for you. I will hit you up on the email I found in your profile.