I guess the issue I have with the quote is that it ignores all the other variables that can contribute to a person's decision. You are arguably correct that turning down an offer with reasonable terms would indicate a low IQ, but its also a personality litmus. I don't see how after completing the necessary steps to even get in a position where they could even entertain the idea of accepting an offer they would turn it down. Especially considering that the general structure of the offer is already a known factor before they even walk in the door. So IQ couldn't be the only determining factor, in fact it can't even really be on the plate. Verily, denying a YC offer should be a DSM-IV criterion for a major psychosis.
I had to give that a point. I guess what I'm trying to say is that there must be a deep personality flaw with someone that takes all the necessary steps and then refuses to go with it.
Interviews are two way things. Perhaps the interviewee isn't so keen having had more contact in person, or doesn't like the suggestion of dropping their idea and going with an alternative. Perhaps they just think the gasps of admiration and amazement from the interviewers means it's a can't fail idea that they're already executing well.
Saying it's an IQ test is wrong IMHO. But it may be a good negotiating stance.
With a nod to ecuzzillo - They're just crazy.