I think the UI actually works for HN in the same way it worked for reddit back in the day. A very minimalistic interface lets the content be king and scares away people who aren't interested enough in the content itself.
The one thing I will agree with you on is thread collapsing, but I've installed a Chrome add-on that lets me do that.
The great thing about USENET was (and well, is) that news is a protocol so you could choose from a few different clients if the UX for one was horrible. Not a panacea, but it was nice to have that kind of competition.
Thread collapsing (I've got that plugin installed as well), and swapping the lighter / darker portions of the background colors for improved readability and contrast.
The one thing I will agree with you on is thread collapsing, but I've installed a Chrome add-on that lets me do that.