Well, I remember reviewing resumes for corporate jobs back in my corporate days and you would be surprised at how many brownie points one can accrue just by following instructions and spelling all the words correctly
I know Neil Marr has said he has very clear author guidelines and those who don't follow them get deleted sight unseen.
But he has also said he will work with an author whose manuscript may not be 100% but who has potential...
It would not surprise me if the 98% figure was true. I hate to admit it, but much as I love sites like Smashwords as a concept, I have yet to truly love any of the 'random guy on Smashwords' books I have read. The ones I have found worthy of recommending to others all come from either established writers like Doctorow who self-publish e-versions for whatever reasons, or from indie authors who have gone through a publisher, however small or unknown. Going through some kind of editorial process, however minimal, is more of an essential than I had realized.
I no longer read the 'random guy' books unless I get a personal recommendation, but I have recently been stockpiling some of the 'established author self-publishing backlist' stuff for my end of summer holiday.