Watching reactions to this around the Internet has been fascinating, because there are a substantial number of people who don't understand why the community of authors is generally so upset. Unless, of course, we're just trying to keep ordinary people from discovering how easy and fun it is to write novels, and how quick you can get famous once you get past The Man who's been guarding the front gate. What they're overlooking is a set of rather nasty complexities attendant on the idea of this model.
With self-publishing, you must be able to pay to play. Being a first-time author is highly unlikely to make anyone wealthy unless they're already a celebrity. I don't know how much Stephanie Meyer got paid for Twilight, but I'll bet you she wasn't quitting her day job until the royalty statements started coming in. Under the normal model, your publisher pays you. That means that it cost me nothing but time to write Rosemary and Rue. Under the self-publishing model, it would have started off by costing me about six thousand dollars, and that doesn't include any sort of promotion, publicity, or advertising.
Writing is not an unskilled profession. Before you assume I'm saying that if you aren't published, you can't write, please hear me out. Like any creative profession, being a writer takes certain learned tools (a functional grasp of a language, for starters), combined with talent and lots and lots of practice. It's a weird cocktail, and the most intrinsically talented writers in the world still need all three components. How do you get practice? By writing, and by being forced to be critical with your own work. When I first wrote Rosemary and Rue, it was the best thing I'd ever written. By the time I finished rewriting it for publication, it was ten times better, and the first draft had become actively embarrassing. Does using publication as the gold ring work for everyone? No. There are some truly amazing authors who have never been published, either because they're writing things viewed as non-commercial, or because they just don't feel like taking the time. But for most of us, the need to improve in order to achieve publication is a lot of what actually drives our improvement. Taking that away is like saying "okay, you've read a bunch of anatomy books, now take out this woman's spleen."
It takes a village to raise a child. People involved with getting Rosemary and Rue to a bookstore near you: me. My agent. My editor. My publicist. My line-editor. My layout and graphic designers. My cover artist. The entire marketing team at Penguin. The guy who sold all of the above their coffee. People I had to pay for their help: the guy who sold us the coffee. People who knew more about what it takes to make a book successful than I do: everyone but the guy who sold us the coffee (and that's a guess; he may be a former publishing mastermind who just likes the smell of java). It takes an army of people to get a book from manuscript to market, and while you can potentially fill all those roles yourself, if you're not independently wealthy, it's going to be really, really hard. I thought I was pretty savvy about how publishing works; then I published a book. It turns out that what I knew was vague and superficial—now we're at "okay, you've watched a bunch of medical shows, now take out this woman's spleen."
We cannot be our own quality control with absolute accuracy. "But wait," you may cry, "it works in the fanfic mines." "Yes, that's true," I would reply, "but in the fanfic mines, you can edit your work for free." Once you expand to novel-length, the chance for errors expands exponentially, and once you've paid someone to put your book in print, your ability to fix them drops like a rock. Consider the number of errors in the average full-length published novel. Now consider the village that played whack-a-mole with the book before you ever saw it. Being expected to be so perfect that you don't need editing isn't just unfair; it borders on actively mean.
Now, all of these points may seem like they're anti-self-publishing, and the thing is, they both are and aren't. There are totally legitimate reasons to self-publish. Maybe you have six thousand dollars to spare, and you just don't like Disneyworld that much. Maybe you're printing a book of short stories written twenty years ago by your high school writer's group. Maybe you have a huge pre-existing Internet following (Monster Island and John Dies at the End, for example, although these were both small press, not self-published). Maybe you just want a printed edition of your grandmother's cookbook. Whatever makes you happy! Most comic books are self-published, and it works out fine for them (although most self-publishing comic creators also form their own imprints).
At the same time, taking aspiring authors and effectively telling them "you don't need to work to improve and learn, you don't have to deal with rejection and unwanted critique, you don't need to do anything but sign the check" is just...it's mean. It's preying on the vulnerability of young authors who don't want anything but to see their works in print. Sadly, most self-published books will never reach a wide audience; they aren't on the shelves in brick-and-mortar stores, they aren't in print advertising (unless you're really independently wealthy), they won't be sending advance copies out for review. They'll just appear in a catalog somewhere, and on the author's website, where the number of copies sold will depend on just how fast the author can tap-dance for the amusement of the masses. By adding the name of a big house to a self-publishing imprint, and the seductive offer of "maybe we'll buy it after all," Harlequin is effectively monetizing their slush pile, and potentially taking the opportunity to grow away from a great many of the aspiring authors involved.
If I had self-published ten years ago, I would never have improved enough as an author to write Feed, or Late Eclipses, or Discount Armageddon, or Lycanthropy and Other Personal Issues. Now, your mileage may vary. But these are my concerns, and these are the reasons that I really think that this sort of "business venture" is just another way of preying on the vulnerable.