Well, yeah, but Twitter's problem is that they're paying for other people's messages and getting nothing for it. If people run their own servers, they can pay for their own messages.
In fact, there's no inherent reason something Twitteroid needs SMS at all; for some purposes, it'd still be useful without it.
One simple solution would be to run it all over Jabber. I set up a Woofer server on my domain, which registers with my jabberd as woofer@example.com. To follow my woofs, you send a request to woofer@example.com; it asks me for permission; I reply yes or no; if yes, it adds you to the list. When I send a message to woofer@example.com, it forwards it to everyone on the list.
(A better solution would be to integrate the woofer with the jabberd more tightly, so that it can send messages from me. But this would be good enough.)
Then the nice part is that SMS delivery is up to the end users: if you have an SMS gateway on your Jabber server, you can send and receive woofs by SMS, and pay for it yourself. You don't get any kind of bulk rate, but you're not sending it in bulk anyway.
Re: Maybe the solution is running it like email
In fact, there's no inherent reason something Twitteroid needs SMS at all; for some purposes, it'd still be useful without it.
One simple solution would be to run it all over Jabber. I set up a Woofer server on my domain, which registers with my jabberd as woofer@example.com. To follow my woofs, you send a request to woofer@example.com; it asks me for permission; I reply yes or no; if yes, it adds you to the list. When I send a message to woofer@example.com, it forwards it to everyone on the list.
(A better solution would be to integrate the woofer with the jabberd more tightly, so that it can send messages from me. But this would be good enough.)
Then the nice part is that SMS delivery is up to the end users: if you have an SMS gateway on your Jabber server, you can send and receive woofs by SMS, and pay for it yourself. You don't get any kind of bulk rate, but you're not sending it in bulk anyway.