Hit the nail on the head. This DZO is a sly fox. He makes these guys feel like they're somehow special and that they should become a TI well before the regulations would permit, because of course they're far more talented than your average skydiver and such rules should not apply to them. But, the whole purpose is to get a staff of people who are entirely indebted to him. He has these guys jumping passengers in thunderstorms, in wild winds, you name it. And when they DO get the experience necessary to say, "Hey, no way, this isn't safe", he grabs some more 300 jump wonder fun jumpers and starts a new TI course. One weekend and they're off doing meat loads. Like you said, they have to "work off" their course and do all of those free evaluation jumps. After which, he's got a new batch of people who will jump anytime in any weather under any shady conditions whatsoever.
So, yes, the DZO hires these guys. And they work for him for a year or so, then move on to other DZs around the country (and world). By that time, though, at least they've actually met the requirements to be doing the job!