News content is distinguished from all other content by the nature of its time sensitivity value and geographic relevance to information consumers. nwzPaper has launched a system that can push content in real-time from a global level all of the way down to the local level instantly when a journalist publishes. The UI is intuitive and much better than reddit. It also provides a journalist perspective for added background on the author. Did I mention direct subscription...and it's not rss?
Check it out:
The big killer feature that could have helped is user-created subreddits. You could create reddit.com/r/quibb, run it on an invite-only basis, and moderate the submitted content to keep it close to your ideals. Of course, that would only solve the problems of content and membership; it would do nothing to fix Reddit's design.
You're right that Reddit does context poorly. Perhaps you should look at Metafilter as an example of how to add context to aggregated news. Take this post for (an exceptionally long) example: [http://metafilter.com/120387] It has a single main link summarized above the fold, with a large amount of historical context and supplemental links below it. Most posts to Metafilter don't go quite that deep, but almost all provide at least one or two extra links on the subject.