But yeah, sounds you're correct.become a giant circle-jerk contest of who can say the thing to attract the most upvotes
Well, that is in a way how it is today - but there's no money involved, just karma or imaginary Internet points.
But with reddit, that's sort of the point. It's to see what the most popular thing is in each topic. What's popular, what's hot, what's new. When money gets involved, things get... weird. Things are done for profit, rather than creativity and entertainment. Some people don't care for karma in the current system, and just say what they think. Some want to get low karma just to see if they can. These will be ultimately eliminated with a money system in place. Dead subs will no longer be created unless the creator knows that people will go there. As I said, it'd be more circle-jerky than reddit is now.