A few days ago I recieved a mail message that said someone offered to scout me. Apparently being "scouted" is pretty much like recieving an invitation in the mail. So I said yes, and started exploring what was available to scouted users. It's mostly the "secret" unscouted art list and the ability to send invitations to non-scouted artists to join the Art Portal. The main reason so many people are not scouted is that Newgrounds tries to scare the pants off you when you try to scout someone, pointing fingers at "YOU" and threatening to kick you out of the portal if something's wrong with whoever you're scouting. Well, anyway, I'll try to be careful when looking for artists to scout.
AliceMako
It's a bogus system but the best they could come up with to create repercussions for people posting content that isn't theirs which used to be a very prevalent issue.
I don't think it's kept anyone from adding unproductive or simply unskilled people and frankly i don't see how someones content or adherence to the rules is anybodies responsibility but their own.
Still, this is the way it is so yeah you're right.