Pinterest does something similar, which is why I blocked it in Google Personal Blocklist. The best way of encouraging people to join your site is to show them what you have to offer, it isn't to put up a wall and make them jump through hoops.

Part of Reddit's early success was due to how accessible the content was and how easy they made it to sign up (e.g. three fields, no email address required). That is not something they should throw by the wayside for short term metrics.