I'm second to few in my support for Capitalism with a capital C. However, there are some things that I think are better done when they user-owned. Banking, insurance, HMOs, sports teams, marketplaces, and now I will add discussion forums to that list.
LJ does have some commanding advantages over the pure blog model. Non-geeks can start one them up, and then use some very advanced features, like multi-person posting (we call them "communities" in LJ-speak), SMS, voice, photo, storage. It is resistant to DDoSing and to the slashdot effect. It is disaster resistant. And the friend-list and friend-filter functions are great features.
It's possible, in theory, to build a distributed decentralized LJ-like system, but getting it off the ground and past critical mass, to where the bulk of active LJers would migrate over, would be an Interesting Challenge.
It would be slightly less difficult to use the codebase to get a competitor off the ground, and structure it as a user-owned co-op, and maybe pulling in the other LJ-clones. But doing that, and again getting it past the critical mass problem would still be an Interesting Challenge, and outside my skillset or interests.
If I had spare bigbux burning a hole in my pocket, I'd buy LJ out of 6A, and then set it free, in such a way that it wouldn't be able for it to sell itself into slavery again. Sadly, I don't...