i co-founded slashdot. helped sourceforge and thinkgeek grow. built some data centers. done some speaking. currently Open Source IT Program Manager at Google
While obviously, yes, we are a public company and aligned with shareholder value, you are vastly underestimating the core of the altruism in the Googlers doing this work (and working on Elections, and G4NP and so on)...and who are also a large amount of the shareholders involved.
As other Googlers have said (and yes, I'm also one) 20% time is a bit misunderstood and always has been. Suffice it to say that it never died, and different groups have different levels of participation - some times, some teams are focused on a launch so the percentage of time spent goes up or down. But generally speaking, yes, this is exactly the sort of healthy thing that we encourage.
K5 was interesting to me, and I actually was the one who negotiated an ad deal between Andover and Rusty to help him with money for the first couple years. K5 had very much the same feel as Everything2 which was the "other" site to Slashdot that the original krewe did. E2 still has a tight community with numerous marriages, people still talking. I think the problem with K5 is that become too self-referential, and ultimately people lost interest. That was the same thing with E2 -- while people for a time loved being part of the community at some point you have to start to do other things in life and the time commitment drops away.
The latter. I can testify to that. And if you look back at when Kevin Rose was doing the G4 stuff, there's an interview with Rob where Kevin asks Rob what he would do different. Rob outlines basically Slashdot + user voting. A few months later, Digg comes out. True story.
What's been interesting to see is the gradual migration back from Digg & Reddit; not so much HN. But the issue tends to happen when sites begin to try and cover "everything" that you end up driving out the original and central audience.
It was; Neil and I actually talked about that at one point. Our first email exchange ran something along the lines of me saying my (then baby) first born had a Sandman mobile above her crib; Neil's reply "And my son's home page is Slashdot"
The moderation system is one of the things Rob and I are most proud of. We set out to make a system that would allow for anonymous postings while avoiding it turning into Usenet. I think, with some hiccups, we largely succeeded. We also took careful steps to make sure that we get anonymized all the data; all the IPs and subnets are hashed, so even we can't go back and find the real IP while still having something to work with.