The second reason that what the hedge fund managers are doing doesn't bother me is that it involves a very elementary principle of partnership taxation. You won't find "hedge fund" or "carried interest" in the Code. Hedge funds are partnerships and the managers are among the partners in them.
The hedge fund manager rather than (Well it's actually in addition to, but I'm trying to keep things simple here) taking a fee gets a share of the gain. Could you get to the same economics a different way ? Yes. Don't admit the manager to the partnership and pay a perfomance fee instead. Then the manager would have ordinary income. The investors though would have a larger capital gain and a deduction. So the amount of capital gain being taxed at a favorable rate is no different.