This needs to be protected by applicants valuing their time. I guess I read the current guy's description differently than you did; to me, it seemed his multiple-job job required significantly more time than the norm.
I think I distinguish between forms of non-monetary compensation as being good and bad (or healthy and unhealthy, if you prefer). Again, this is all relative, but I think at least on a base level we can probably find common ground here. Accepting lower pay because a place to work is "cool" falls squarely into the unhealthy pile for me. Perhaps it temporarily raises your happiness level (which is of value!), but it's fleeting, and, well, temporary. Accepting lower pay because you're underqualified and the job will be a bit learning experience for you seems reasonable, as would accepting equity in lieu of pay (e.g. a recently-started company) if you think it might be worth something later to compensate. These sorts of things can have lasting impact on your life and are actually useful.
As I said, I just worry that things like this can inspire other companies to do similar things. Right now it's fairly easy to get a job at a good company if you're a developer with some chops. Demand is high and supply is still not quite meeting that demand. But what happens if that changes? If there's a strong culture of paying people market rates and avoiding my-company-is-cool type compensation in lieu of cash, perhaps people can expect a reasonable wage standard when the market is more competitive. But every company that tries to feed applicants some feel-good bullshit about how it's ok that they pay people less because they're just so cool... well, that jeopardizes that.
Or perhaps I'm just worrying about nothing.
