The bigger issue is not that the dilution from the option pool creation happens at that early stage (rather than JIT), it's that VC's require the creation, and

The bigger issue is not that the dilution from the option pool creation happens at that early stage (rather than JIT), it's that VC's require the creation, and therefore dilution, to happen pre-money. Because of this, the founders carry the burden and the new investors don't -- despite the fact that the investors will reap some of the benefit (equity being available to grow the business they now own).