That sucks. I can't see why YC would get all up in arms over this. Not like you guys are really competing with them or belittling them or anything. This strikes me as a great thing for people who don't get into YC or who can't participate in YC for one reason or another...
The teams who finish will probably have an mvp, maybe a pivot or two, hopefully some user traction. That might be enough to get to VC's in this climate. Or even just bootstrap and own the company 100%
It's also far more likely that the good teams will get sniffed out by angels at this early stage rather than giving pg a bite at the apple
Having said that you're right, I think pg will want to be close to these kind of things rather than futilely trying to kill them
