One of the outputs from the YC process is better educated founders who have a lot more guidance in negotiating through a deal.

Even if the deal flow was exactly the same, just having the founders suffering less from information assymetry would be a stone in the shoe of the Angels.

Think of it this way : if YC did all the same things, but also turned founders into being Angel patsies at dealtime, do you think they would be upset about it? I would guess it's the information about how to negotiate, and what a good deal looks like is the problem. I'm sure they love the concept of demo-day to go deal shopping, but would prefer it if the products didn't talk back.