I have a lot of respect for this viewpoint, and the clarity with which you state it, though it is almost exactly the opposite of what I would say myself. You should write an essay on this if you can find time. It would be incredibly interesting, at least to me.
I think framing matters. If it's presented as "when you take my money, you must live on my land, be overseen by me" etc., it's almost feudal, and of course no-one with free choice would choose that kind of environment. But if it's "if you want to be mentored by me, I can host you for a short while along with a bunch of other ambitious folks", it seems different.
Sounds like the thing to do would be to eliminate that friction by helping people quickly and easily locate places of their own, then.
YC isn't a charity, after all, beyond the public forum for discussion they provide in HN--and even that is arguably a chance to promote their own startups and scout talent. :)
I was under the--obviously mistaken--impression that pure profit motive was involved here, and thus was curious if a blog entry would be stating the obvious. Now that you've given some more info there, I agree with my parent poster--please do a writeup!