I actually think it's a good rule. I have it on my directories as well. However, I think LL owners should consider laxing other parameters in that case. When you use a domain for a site, you might want to do just a little more than your run of the mill 4 pages freesite.
I use seperate domains for my sites, but I also have sex stories on them, so a larger number of pages. Take a look and let me know if you think these would have a chance of getting listed. Let's say I get 2 on-site gallery pages for each one -
http://www.cheerleader-pussies.net/
http://www.teen-ass.ws/
http://www.hottie-wives.com/
http://www.hot-moms-banged.com/
I have many others just like them. They sure follow the no subdomains rule
and I can get the recips table and a couple of gallery pages in each.