The OP seems like an overly and unnecessary complicated way of addressing delegate pay dilution. It would not address dilution. In fact, it would do more harm than good to bts.
1) "We have 7 core developers that need at least $25,000 per month (combined)"
Not surprisingly, the core devs needs its funding. The question is what happened to the ags and pts funding for both Bitshares and Vote. Have they been used up? If there are fund left, use them instead of diluting the bitshares supply.
Empirical mentioned ""another 365 million BTS to the core development company (12%+ equity) would add to those concerns I think. "
This concern needs to be addressed.
2) "we would receive 250,000 BTS per day"
250k bts out of a total available 432k bts, you are talking about core devs taking 60% of the available 'dilution-to-fund'. If the core devs are talking such a major part of 'dilution-to-fund', why not take out this "250k bts per day for the next 5 years" from the bts supply and then you manage this fund separately to pay your core developers?
3) "5 years is long enough that the project is either a success and the dilution is insignificant or a complete failure and the shares are worthless anyway."
To ask the Core Devs to wait for 5 years before they can use their pay is to ask them to bear too much risk unfairly and unnecessarily. A core dev who has to keep worrying about his pay (in bts going up or down in price) each day is not good. He should be concentrating on his work and not the bts-price-of-the-day.
And even if the project struggles and manages to be a success at the end of 5 years, dilution is NEVER insignificant. At least the impact due to the perception of dilution is ALWAYS significant.
If the shares are worthless at the end of 5 years, the core devs get nothing?
It need not be a case of a either-success-or-failure to the Core Devs or the BTS Investors after a long 5-year. Both the Core Devs and Investors can manage, minimise and share the risk together.
4) As PC pointed out, this new way will disadvantage small non-core workers greatly.
5) "432k bts/day to spend"
A limit and a cap above is unhelpful. What if the developments needed more fund? What if we needed more developers? What if the bts price dropped even further?
6) "Perhaps most importantly, this would still keep the number of block producers decentralized and keep the sell pressure caused by dilution at bay."
Keeping block producers decentralised is good. But this will not keep away sell pressure because dilution is there. What you need is building confidence in both the investors and users that this project will turn out to be successful.
Move whatever fund you need to pay for development out of the supply of bts. Better still, find other funding source and bring bts back to zero or near-zero inflation.