The book analogy falls apart here, because only a limited number of people are accepted to YC or TS, while a (practically) unlimited number of people can read Harry Potter. The existence of two YC-like programs doesn't significantly decrease the amount of interest per program, especially since you can apply to both. It does, however, significantly increase (approx double) the number of entrepreneurs funded, and the competition may encourage YC to improve its program further.
As for your book example comment, if somebody wrote Henry Potter, I imagine lots of people would read it. The story in each new Harry Potter book isn't new and exciting either... it's the same story, new details. Also, just because Harry Potter was the most popular series with that story line doesn't mean there's no demand for other similar books.
We don't accept a fixed number of applicants. We'll fund anyone who seems good enough. If we suddenly got 30 great applications, we''d accept them all, and worry later about how to cram them all into our space.
As for your book example comment, if somebody wrote Henry Potter, I imagine lots of people would read it. The story in each new Harry Potter book isn't new and exciting either... it's the same story, new details. Also, just because Harry Potter was the most popular series with that story line doesn't mean there's no demand for other similar books.