There is one provision with that statement, it takes a relatively long time to average out the larger variance the small miners suffer.
This.
The drawback is that it also increases the day-to-day variance. In the long-run, it doesn't matter, though.
This.
Just with a higher variance.
This.
Variance is what I've been mentioning in the original thread for days. High diff will not affect pool's profit, but it will affect small miner's reasonable variance.
h2o has previously stated that we are using a proportional system. I agree that changing the payout algorithm to something like PPLNS would also help smooth out the variance.
Right now we have the worst possible setup for small miners - high diff with a payout calculation that does nothing to smooth out variance.
Over a long enough period of time (although I have no idea if that's weeks, months, etc) it shouldn't matter. But isn't the whole point of a pool to minimize variance?