Yeah I think bounties are worse than work-for-hire.  It would be better for both parties IMHO if funded projects were put out as a work-for-hire contract, the contractor screened applicants and accepted just one, and paid out only if and when the work was completed to the spec that they specify up front.

With bounties you get multiple devs working, people complaining that they helped and didn't get any of the bounty, people not capable of the task elbowing out people who are, and the contractor has a lot of uncertainty around whether or not someone is working on it.