It seems to me that the unspoken issue here is the dichotomy between founder and employee. Not every employee is going to be someone of whom you would say "I would go into business with this person." While I agree that companies should keep standards high, at some point (and I would maintain that point is not very far out on the curve) if you can only hire people you'd form a business with you are going to hit a wall when it comes to growing your company.
I'm not a founder though, I'm employee eight billion at Bank of America. It's just that hiring people that are bad at programming is so demoralizing that it's better to not hire someone unless you're 100% sure they will turn out awesome. Otherwise, you'll spend all your time "helping" them, and neither of you will get any work done. (Nobody ever gets fired because it makes you look bad, or something, so if you make a bad hire, they're here for life. Especially since they are getting paid above market.)
