There's a difference between monetizing traffic and bastardizing content (though I'll be the first to admit I'm not readily familiar with Digg's community.)
I think there's still a pretty big niche to be filled with genuine high-quality news aggregation. Even if they were to nuke Digg and start anew, having that existing userbase is a big advantage.
4M monthly uniques that have been downright hostile to any attempt to monetize their traffic. Alexa Rank of 191 with no avenue for actual money.
It's not all about the users.