The YC application is a sales pitch, and you're not selling your idea, you're primarily selling your charisma and capacity to spin vision and sell. Second, you're selling your chemistry with your cofounders and stability of your relationship. Third, you're selling your capacity to build, at least some usable prototype, but this a low bar.
At no point are you actually selling the concrete idea, unless you're doing something extremely specific that seems valuable and you're one of the few who can build it. For the rest, the idea is a rhetorical vehicle to sell the other things.
They do. They say:
> Elon understood the mission did not imply open-sourcing AGI. As Ilya told Elon: “As we get closer to building AI, it will make sense to start being less open. The Open in openAI means that everyone should benefit from the fruits of AI after its built, but it's totally OK to not share the science...”
Whether you agree with this is a different matter but they do state that they did not betray their mission in their eyes.