Is this the standard way to do bounties, where you take applications and then choose someone to attempt the bounty? I always thought you'd just state the requirements and the bounty and then screen the submissions and chose a winner.

Granted this does feel a bit less like asking for spec work so I can see why they might have chosen to go this way instead of generically accepting bounties.

It's not a standard way to do it. Different projects adopt different approaches.

I posted a list of projects offering bounties elsewhere [1] in the thread.

[1] https://news.ycombinator.com/item?id=45278787