I don't think the hacker news / stackoverflow model will work for research papers. People read hacker news articles because they want to keep up with what's going on in the tech community, even if it's not super related to their particular job. Researchers generally don't just read research papers for fun. Rather, they are working on their own research, and they are looking for relevant papers whose results they can use. Hence, it's critical that when they read a paper, they know they can trust the results.
I can skim an article posted on hacker news in 30 seconds and have a general idea of what the content was. I can also skim a research paper, but only if I know that the research was done well (e.g. all the proofs are correct, or the assumptions in the model made sense, or all correct variables were properly controlled in the experiment). If that stuff isn't guaranteed, the paper is useless because I don't know if I can use it for my research. And to figure out all that stuff myself would take a few days literally out of my research. Just because 10 people skimmed it, thought it sounded cool, and up-voted it does not mean the results in the paper are correct.
Other than this review aspect, I really like this product. If they can figure out a good incentivized review system, I think it will be a big hit.