One of the problems is that it seems like people are seeing HIVE as a free pool to serve themselves, without thinking about the consequences. It's not free money, and as you say, even small amounts affect the overall situation over time.
That said, I always applaud the idea to find ways to sustain a community, especially if it's beloved and has an active community and therefor adds value to HIVE, not extracts it. But the suggested way is an abuse of the voting mechanism for me. It seems like an easy way out, just like those auto-vote-farmers.
Why not make a daily newsletter about the game and use those rewards for the same reason? The idea itself is not bad, but the execution is. It does not feel good that way.
Splinterlands has a totally different approach, which is benefiting both the game and HIVE - Challenges and Contests. Build a strong community HIVE account, have some manual curators, and encourage people to write great articles about the game to spread in social media. Reward? A nice up-vote from the SPL Account and some adjacent. Benefit for HIVE - more exposure on other media channels. Benefit for the SPL account - more exposure and rewards to grow and support more users.
That's what brings a flywheel in, for both the game and HIVE.
Now, another idea would be what was suggested to you by stickupcurator in the comments about posh, the game could make a proposal to fund them to overcome a certain amount of time, restructure and proof that their game is really worth it. If they can make a good case, they can get funding. I think HIVE in general is a generous community, and if they can make us understand the value of their project, it will be well received.
The thing about the freedom here is also the responsibility. The attitude to have the rest of the community suck up the shortcomings of some is not that, that's like rescuing banks. So, to answer your question: Yes, they should be allowed to fail, if they don't come up with a sustainable solution that does not subtract from the rest.