You had to give money before you were able to receive money... Sorry, that seems like a classic pyramid scheme. Good that you stopped doing that.
I'm having a hard time thinking of a single B2B company that isn't a pyramid scheme, by that definition. Pretty much everyone spends money in order to make money. Easy example: before I can build and sell my widgets, I need to buy the parts for them.
Being required to put money into Flattr before other people could give you money sounds a bit shady. It would be like the postal service refusing to deliver your mail unless you send a few letters every month.
Maybe that's the point, but I honestly have been confused as to why the process with Flattr is so complicated. What I want is a "great blog post, kid, here's a quarter" button. Flattr feels like it's mostly there except I have to keep track of who I've Flattr'd each month to make sure I'm handing out the amounts I wanted to. It could be that in the end this is "the better way", but for the need I feel this mechanism is kind of off-putting.
A conventional tipjar, by the sounds of it. These have been tried and they generally don't work. My theory is that this is because they violate Krug's 1st Law.
Now that it has been removed it may be time to look again into Flattr :-)