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On routes that are heavily front-loaded (a connection from a metro line to a neighbourhood the metro doesn't reach, for example), this can result in the first five-to-ten stops on the route effectively being knocked out during rush hour. Anybody who actually wants to catch the bus has to walk ten blocks over to the first stop.

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You would only do this during times when the throughput of the system is still higher than the arrival rate of people. It's essentially trading throughput for reduced latency. During rush hour you need throughput.

A display at the bus stop showing when the next 3-5 buses are going to stop approximately solves the problem

It really helps. In New York some subway lines have this and some do not. On the lines that do not, you sometimes hear the conductor announce "there is a train immediately behind this one" but it's not nearly as effective as when everyone waiting on the platform has been able to see that.

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