Incidentally, YC hasn't gotten as much more competitive as you might think, because we've grown as the number of applications has. We consistently end up funding about 3% of applications. Not as a conscious strategy; it just always works out to about that. Applying to YC has grown somewhat more competitive though, because the top 3% keep getting better as we get better known.
If the application is assessed primarily on the founders, is it really worth failed applicants applying again? Speaking as someone who has applied (and failed, with cause!) twice relatively recently, and as an experienced 14 year 'veteran' of web technology, I can't say that my experience, skills or business-savvy have drastically changed since the application from 6 months ago.
As there's (understandably) no feedback for previous rejections (e.g. "Your idea sucks" vs "Your founders suck"), it's difficult to tell whether it's a waste of time to apply again. (Having said all that, we will of course be applying again anyway!)
Have you had many groups accepted after being rejected at interview stage?
How did the teams change between rejection and acceptance?
Was a different idea enough to consider them in a different light or is the interview process just sufficiently noisy that they were false negatives earlier?
There will be a ton of startups applying where the founders left their jobs/schooling ahead of time.
The sad thing is that when I think about it, I wouldn't fund someone without a prototype (if the roles were reversed). It is only when you build something do you realize if the materialized idea has any wings. Quite the mess I'm in :(