This makes no sense to me. He's only doing a service for himself and those that advertise through him.

If I want to start my own online radio station (I know, it's been done), onlineradio.com seems like a good place to start. Except of course that it's being squatted on, so I can't pay the "public domain" price that I should be able to, but instead I have to pay one of these bosos whatever they think it's worth. The fact that he bought it didn't help me come up with the name... it's an obvious name, and that's why he bought it in the first place.

So where's the service again?

The service is that he's making onlineradio.com available to you, for a price you both agree on. If he didn't, and someone else took it who wasn't a squatter then you would have no chance of getting it.

He's selling you a second chance to get the domain name, and a service of preserving the good domain names.

i don't see it, where is the value add?

Speculation creates a market and helps resolve real prices (rather than phony prices--for example, 10 dollars a year for every domain, whether weddingshoes.com or xxxyalfjadsgjg.com)

Exactly. He's also thinking of the names in the first place (excepting the misspelling type ones like google.cm).