The original such library was Perl's Data::Faker which was ported to Ruby as Faker gem (and later refactored to faster and more comprehensive Ffaker gem).
In most use cases I can think of the generated data is used only in a closed (testing) environment and won't be visible to web crawlers and spambots. Many developers like me use these libraries for prototyping different UI views for their apps.
Unfortunately, spammers do have way more advanced technologies to try and guess working addresses. Libraries like this generate mostly very improbable addresses: you would get way better results just by taking lists of most popular first names and family names and concatenating them with some well-known web mail providers.
That's true. They're using the Finnish exchanger (Bittiraha) which also provides payment services for world's first Bitcoin-accepting dental clinic (MeidänKlinikka) as well as Finland's first Bitcoin-accepting restaurant (Vegemesta).
Inspiring story, thanks for sharing! Centralized recruiting for portfolio companies is something I'd definitely love to read more about. I believe it can be an extremely valuable service from a VC firm to provide.