I just remembered the name.  Was p2pmining. 

https://bitcointalk.org/index.php?topic=66202.0

There wasn't any risk to the pool operator, to my knowledge.  The basic principle was the subpool had it's own share chain (or equiv - could manage with a properly designed database) to track the p2pmining users.  Each share was also submitted to the real chain under the p2pmining address.  When a payout occurred, it was divided among the users in the subpool based on their piece of the subchain.  This also allowed merged mining to occur at a sub pool level, instead of basically solo, which is what p2pool is now.

The downside, of course, was it was a mini centralized pool, subject to possible pool operator abuse and hacking.  Hacking is what brought it down..