I am bringing up a very valid question and I'm not saying that I'm gonna do that, but if I was in PG's seat during the YC interview, that would be my question and I like to hear the founder's response because it is a valid concern and unfortunately a reality too.
I'd say the barrier to entry for other startups would be the awareness and userbase that Tapzilla may manage to develop.
For instance if Tapzilla can say to a developer that they have 20,000 users with an average 20% redemption rate then Tapzilla is going to be a lot more likely to be successful in selling their service to a developer than a new operation with only 50 users.
To be able to do this successfully on a longterm basis Tapzilla will need to be able to get several case studies as evidence that, due to the freebies, a certain App went up the sales charts which then resulted in more visibility and more paid sales. Otherwise it could just be a losing proposition for developers.
I agree that user base IS a barrier for entry but hardly unique to any business, startups. Almost, and not ALL, business plan that I've seen cite "ability to achieve massive user base" and "first player in the market" as barriers, I choke almost every single time reading that.
I hope PG did ask this question during the interview, so it should be easy to answer my inquisition.