What about the people who should have been rejected? Surely, with so many companies there are companies where rejecting them was a service. Now they are instead

What about the people who should have been rejected? Surely, with so many companies there are companies where rejecting them was a service. Now they are instead getting that validation which might make them go on working on something obviously fruitless. It might not even be their own fault, it might just be that no one in YC is really excited about working with them and you can't offer much else which you should be up front about. It is of course admirable that you want to make things work, but I definitely wouldn't underestimate the challenge of transforming your whole process retroactively.