I had a bad experience with Two Sigma in 2007 - After spending half an hour on the phone, and then a further two hours writing code for a couple of programming problems, I never hear back from either the hiring manager or the recruiter. It didn't hurt me so much that I wasn't selected, rather they consider ~5 minutes of their time to compose a rejection email to be more valuable than ~2 hours of my time.
The teams accepted would be under tremendous pressure to find an idea after being accepted. If they can resist the temptation to start working on an idea they are only moderately passionate about, just because the clock is ticking, this experiment should succeed. Folks at YC can help with this.
The important thing is exactly when and why the ban happened. As others have pointed out, his latest bug report that got him banned was hugely better than his older bug report filled with personal insults that got him a warning. This shows that he took the warning seriously enough to stop the personal attacks.
Banning him now makes me think the developers of Thunderbird are ego maniacs.
Given that Java doesn't have typedefs how would you reduce the verbosity of :
ConcurrentHashMap<String, Integer> foo = new ConcurrentHashMap<String, Integer>();