I'm in this boat. Me and my co-founder had enough to live on while we worked on the product for the last 6 months. I did do some consulting one day a week for spending cash, but it was limited to that and never really caused a huge time-suck.
YC never really entered the conversation for us, I view YC as a place for people that fall into a "I have this idea I want to try, but if I quit my job I can't pay rent" type category, which wasn't me or the people I'm working with.
(edit to say that I'm not knocking the stated category, I'm really happy that YC exists)
I think the valuation is partly in response to how ingrained the twitter brand is becoming in pop culture.