That's a bit of a gimmick. Management still pays themselves from the % of invested funds, not fund performance. Same issue as with a nonprofit -- the corporate profit structure is only one source of moral hazard.
Vanguard actively moves clients from their baseline funds to the lower cost/higher minimum Admiral versions.
I just don't see moral hazard in Vanguard, compared to other financial firms with remotely similar capabilities and offerings.
The expense ratio of Admiral Index 500 is .05%, not .2%. So even better than I'd remembered.