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Their reason, as I remember, was that most sites that submitted were spam, so submitting served as a negative indicator to them. They went on to say that if they then found you through links, they would remove the demotion.
Since they were very slow to spider at the time, my strategy became to wait until a site was well linked (say had a dmoz listing), and then to submit the linking pages. I don't know whether this actually sped things up, but it felt good.
With the new Yahoo, since they've invited free submissions, I doubt that they hold submitting against you. My short experience, though, suggests that, as with Google, submission simply isn't necessary. I'm seeing Yahoo finding, spidering, and indexing any site of mine that has enough inbounds for it to rank.
