From how I read "the rules" it sounds like:

* demoing a product/website: fail.

* showing how something (which could be a startup product, but most likely isn't) works under the hood (code, etc.): win.

So exposure is not the point; the hack(s) that make it work are the point. At least, that's my take on it. Sounds interesting.

Where do you get the idea that this is for pitching a startup?

(http://freehackersunion.org/rules.html - Rule #8)

Ah okay, I misunderstood it. I did not read the rules :( Okay, I still think it's a good idea.