That said, my uninformed reaction is to consider this a good move. The last thing Yahoo needs is another project with no clear business model, regardless how cool. This is the kind of work that should be funded by massive donations like wikipedia. If it's going to be supported by a company, it shouldn't be one on life support.
And there's something else I don't get. Why are they not trying to outsource projects that they do not consider to be core? Why are they not asking people like George to enter into some other kind of contractual relationship with them that would allow the continuation of a good project? Someone as well connected as George might be able to find additional funding for Flickr Commons from other sources.
I can see this got downmodded into oblivion, yet I don't think it's so far from the mark. I noticed some cognitive dissonance in myself while reading the original post under the assumption that George was a he. It dissipated when I figured out she's a she. Such a clear little "experiment" doesn't come along very often so I think it's worth paying attention to.
Personally I think it was a good site until Yahoo! took it over. Now it feels a bit like that local friendly coffee shop you'd been using for years that suddenly became a Starbucks. I'm sure there's room for an innovative competitor there.