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One of the biggest problems I can see, providing quality etc remains good, is the very low shelf life of such sites. To be effective there would need to be a new site hitting the new list all the time. This would mean you providing a new sponsor hosted free site almost daily. If this could be done then they may not be such a bad idea.
Although you could say the same for hosted TGP galleries there are a LOT out there so a TGP using hosted galleries can keep a fresh gallery or 4 on the new days sites for a very long while.
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The light at the end of the tunnel just went out.
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