It can fund you in ETH, but it doesn't mean it has to be an Ethereum project. At least that's how I understood it, which is actually the beauty of it. If contractors are requored to only to create projects in Ethereum then that would limit the potential of the DAO.
Yes that was the meaning of my second paragraph. But in practice I don't think that will happen short term. I could be wrong though.
I'll need to do some more reading on DAO funded projects. My understanding is there is a governance requirement whereby the investors must vote on every expenditure. Am I incorrect?
No, they are not required to vote, but spending must pass by a quorum (I think 40%). The quorum requirement probably won't be hard since there is high concentration of ownership.
So does this mean if funds were raised and it was voted not to release all the funding to AnonyMint, then the minority of investors who are overruled by the majority end up with some turf battle gridlock similar to the block size debate.
No, there is a minority-protection rule (called splitting) where you can withdraw your investment if you don't like what the majority is doing.
Of course these are just the rules for this particular DAO. Other rules are possible.