1 - The problem with giving away templates is that as more submitters use them, more reviewers get sick of seeing them & thus, they reject the submit. Even if you tell them to "make it custom" a majority will not even touch it & the sites will all look almost identical.
2 - Hosted Free Sites are a good idea, but no one allows them to be submitted. For more info on Hosted Free Sites, read these threads:
Linkster's HFS Thread -
http://www.greenguysboard.com/board/...ad.php?t=15875
My HFS thread -
http://www.greenguysboard.com/board/...ad.php?t=30075