That's what he did, and he did it for bloody cheap. If you read the breakdown of his costs, you will see that the actual programming + site + logo just cost $4500.
Having dealt with code monkeys that need to be micromanaged, I'd much rather pay $4500 and see a finished product than waste my time micromanaging the development of such an application.
Is the idea stupid? No. It's a reasonable idea. It's a niche idea that has some potential if executed right. Did he overpay? No.
The hardest lesson I ever learnt was that it's often times really not worth it to do things yourself. As a hacker, it's tempting to always do things yourself, but realise at every single point in your life that it's time that is your most valuable commodity.
He's not a hacker. If he tried customizing pligg, it would cost him a lot more time than if he just hired people for $4500.