(surely you can't earn decent salary while working for charity and if you'll donate to it your quality of life is sure to decline! and sense of mission doesn't count as anything either! but maybe, just maybe, it's not all about the money?)
First of all, not many $200000 jobs are available to people who are willing to make $35000.
And second, you totally neglect the non-monetary motivations and contributions of people who work for non-profits. Why do you think anyone but not this particular person can have the same contribution to the project for $160000? I'm sure Tim O'Reilly can and earns much more from his other ventures. That doesn't mean that just by donating amount equal to his salary at Gov 2.0 project anyone can make the same impact, don't you think?
And what if the person that's going to do it is a fresh millionaire who just sold his start-up? Would you still discourage him/her?