Interestingly enough, there is already a tradition in the valley of doing this with VCs. It's called the "EIR" program, standing for "Entrepreneur in Residence." Basically, the VC pays for people with a proven track record (Former COOs, CEOs, CTOs, Principal Engineers, etc..), a salary to evaluate startups and business ideas that come their way, and, on occasion, get involved with them - sometimes as managers, or contributors, but also quite often to reboot them under the auspices of the VC. In general, these EIRs of the "reboots" consider themselves closely akin to being "Founders" - though their equity stakes are usually somewhat less, but, at the same time, they usually have a guaranteed round of funding from the supporting VC.

What YC is doing, (particularly with the guaranteed convertible) is extending this concept to people (presumably) somewhat earlier in their career.