What's wrong with making the site region-based? Maybe don't discriminate by country, but certainly limit people to their own region/country. If people are looking for slave labour from India there's always Elance.
If there are Indian freelancers with verifiable high quality work, OSS contributions etc. they deserve to be able to compete on a level playing field with similarly qualified Americans. You could always design a filter for those people who for whatever reason were only looking for developers in their timezone/country/city
We definitely want to be more inclusive. Just taking one step at a time. We want to maintain a high quality median. Basically want to see quality content everywhere.
There seems like an open backdoor to arbitrage abuse from middlemen. For example, I am a respectable developer from the US, with an impressive resume, portfolio, and verifiable LinkedIn, Hacker News, etc. accounts. Can't I create an account with a minimum rate of $35/hour and turn around and pay my team in the Philippines $4/hour to do the work?