Yes, we need to do something about this and tomhow and I are talking about it - it's not clear yet what. Raising the quality bar would likely cut down on quantity as a side effect, and that would be a nice solution. One idea that a user proposed is a review queue where experienced HN users would help new Show HN submitters craft their posts to be more interesting and fit HN's conventions more.
Once some users have extra power to push content to the front-page, it will be abused. There will be attempts to gain that privilege in order to monetize, profit from or abuse it in some other way.
The only option along this path would probably be to keep the list of such users very tightly controlled and each vouched for individually.
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Another approach might be to ask random users (above certain karma threshold) rank new submissions. Once in a while stick a showhn post into their front page with up and down arrows, and mark it as a community service. Given HN volume it should be easy to get an average opinion in a matter of minutes.