Rather than, say, add more tag mods they proposed that you could only nominate if you had a clean record of doing Yuletide for 3+ or 5+ years. (This is pure speculation on my part.)
Actually, in the beginning (well, not the very first Yuletide, for obvious reasons) you could only sign up for Yuletide if you had either participated the previous year (and not defaulted or otherwise sinned) or written a NYR. I started in 2005 and had to write a NYR before being allowed to sign up.
(also, they have certainly added a lot of tagmods in the past few years! Just look at the Maintainers on the current tagset - that's more people than have signed up for some exchanges I've been in...)
Re: Your Yuletide sins
Actually, in the beginning (well, not the very first Yuletide, for obvious reasons) you could only sign up for Yuletide if you had either participated the previous year (and not defaulted or otherwise sinned) or written a NYR. I started in 2005 and had to write a NYR before being allowed to sign up.
(also, they have certainly added a lot of tagmods in the past few years! Just look at the Maintainers on the current tagset - that's more people than have signed up for some exchanges I've been in...)