Does this mean you are distributing the transaction fees?
Yes, and no.
We're using it for funding payouts - so basically we ARE "distributing" the fees again. (Keep in mind that we have no limit of payouts/h)
It's not going to our pockets anyway.
I don't really understand that but it sounds like you are distributing them. Can you clarify this:
When the pool solves a block, are you dividing up 50 BTC among the miners or are you dividing up (for example) 50 + 0.89428576 BTC among the miners?