I'm a bit late to all this, just wanted to add my 2c
With regards to increasing the number of recips: as a submitter that sounds fab as it would reduce effort but it has SEO implications:
http://www.google.com/support/webmas...n&answer=35769
"If the site map is larger than 100 or so links, you may want to break the site map into separate pages."
I think most people take this to mean that you shouldn't have more than 100 links on any given page. If your recips all have two links (main and category) then your site begins to sail very close to the wind if you've submitted to 40 linklists.
On a general note, I welcome a discussion about the freesite format as I must admit it has become rather rigid. Removing the warning page, however, does feel like you're losing an opportunity to sell.
My own small linklists have happily listed all kinds of sites. Today, for example, I listed this one, which isn't a "free site" in the LL sense of the word.
http://scandalouswomen.com/
But it's definitely worth listing because it's useful to a surfer.
So if someone was to submit one of these 1.5 things to me, I wouldn't be too concerned, as long as it was a quality site.