If a block is found in the first 599 shares, the extra is paid to me. On average, 36% of the subsidy of a block will go to me as a result of this. This is a trade-off between minimizing the payment to some central entity and having lower variance in payouts. If the proportion going to me were reduced by half, variance would double. I believe that this is an acceptable compromise.
I think this is a beautiful system, but I have a suggested improvement.
If the block is found in the first 599 shares, it should be payed to a multisig escrow. Like this:
https://github.com/bitcoin/bitcoin/pull/319The keys in use could be held by either a collection of parties (reduced trust centralized) or, better, by a large deterministic random subset of the P2P nodes. E.g. Take all of the nodes who were paid in the last round and use the block hash of the last block to pick 21 of them (or all of them if there are fewer), and require >50% to sign the transaction releasing the escrow to the appropriate receivers.
I believe this would completely decentralize it while preserving the other properties of your system.