1) I think that the problem is that you've created a competition, and that as a result, people would vote against each other. You're probably correct that people do typically vote for candidates without self interest, but I think that the problem is you've pitted people against each other. If I've entered a race, I already think that I am the best option, and will take action to help my success. This is almost like the prisoners dilemna, in that voters almost assume that others will act in self interest, and as a result do the same. I think maybe you just have a more optimistic view of how people will act in this case than I do.
2) I don't think we should dismiss people from voting for any reason, or say that a lower voter turnout would be a good thing because it's focusing on the people who actually "care". I think that in some ways giving people party lines is a good thing in some ways because it allows them to vote without necessarily needing to do research into a candidate. If I personally identify myself as a liberal, I don't have to do much research before voting democrat, and in fact, researching candidates is probably only going to strengthen my opinion of them both. I'm by no means saying this is an ideal situation, and it is certainly one of the main problems with a partied system. But I think if you make voting something thats only available to those with enough time to research it then I think you run the risk of misrepresenting an extremely large portion of the country, ending up with something chosen by an "elite" and I almost feel that this is a worse option than having people vote from their gut.
3) I think this is way off base. I can think of some pretty outstanding members of our society who choose a path for ethical and moral reasons outside of financial gain. Teachers are a great example. They are educated citizens working for the benefit of society, but some of them sure as hell don't make 40k. Should we exclude people like this because they chose a path that didn't give them the most money? Having a high paying job doesn't necessarily mean that you're educated, or a frugal person for that matter.
As I hinted at above, I guess I don't mind the party line voting. I don't mind the labeling it provides because, as I said, I think it encourages voter turnout. If you're given two candidates, and you have to choose between them, without labeling them as liberal or democrat, is a person significantly more likely to choose a different candidate than they would have with the label? If hypothetically Sarah Palin ran against Obama, and we didn't label them as democrat and republican, would voters choose a different candidate than if we had?
Again, I really do appreciate your response, and I'm sorry if I seem combative, I just like the debate.