A bunch of people (including me) have written all kinds of things about the economics of poetry publishing, various solutions to its challenges, and the frustrations we feel about some silly yet pervasive attitudes re: legitimacy and brand names. Good, we can skip all that this time.
Please, everyone, stop saying "vanity press." It's a stupid term--pejorative, emotionally charged, insulting. It's a slur. (And if I may repeat myself, no author seeking publication is exempt from ego-involvement. Call that vanity if you like, but apply it everywhere.)
A neutral and more accurate term than "vanity press" would be "subsidy press."
A subsidy press sells books to the author--vs. to an audience. The author is the customer, not a readership. The author pays for the entire cost of producing the books. The company offers little to no marketing or distribution support, or offers those things for fees. The most important distinction between a "traditional" press and a "subsidy" press, however, is editorial. Subsidy presses will accept any* manuscript for publication, so long as the author pays the fees. They may offer some editorial work in the form of copyediting and proofreading, but they do not collaborate with the author in the final shaping of the work in the way a traditional press does. Subsidy publication is a bought service, and the author is not paid any royalties for sales (since they are almost exclusively to her- or himself). An old-school subsidy press looks like Vantage (where a million years ago I interviewed for a copyeditor position, answering a mysterious ad in the back of Publishers Weekly that gave no clues about the identity of the company).
If we're going to discuss methods of publishing (hooray!) we should call each method what it is: self-publishing, subsidy publishing, cooperative publishing, collective publishing and/or any of the other methods of publishing that involve individuals and small groups rather than Official Institutions or Corporations. Let's be respectful, specific, and accurate with our terminology.
I don't know enough about BlazeVOX's publishing practices to offer a detailed assessment of how that press is run. I like a lot of their books though, and I plan to keep buying the ones I like. And I'm sure Geoffrey Gatza (whom I've met once but do not really know) and I would not agree on all things Poetry Publishing. But I can offer this general opinion: Unless Geoffrey Gatza is offering a financially contingent acceptance to EVERY manuscript that is submitted to the press, BlazeVOX is not a "vanity publisher." Because he is exercising editorial judgment in selecting manuscripts for publication. He is (as reported by BlazeVOX authors) working in a collaborative fashion with each author to edit and prepare each book, actively involved in helping it achieve its final shape. He is (as Google will confirm) supporting the books via promotional activities, such as review solicitation and other media-related publicity, and via distribution activities, including direct to-the-public sales via the press website, buying into the SPD distribution network, the Amazon.com distribution network, etc. Unless the author is paying the full cost of all of these preparation, printing and distribution activities for her or his book (and the author can't possibly be, for $200! $250!), BlazeVox is not a "subsidy publisher."
BlazeVOX, from here, appears to be working its little tail off. Their website says they also pay 10% royalties on net receipts to the author(s).
Apparently, BlazeVox has been using a financial model for some time that can fairly be described (from what I understand about its parameters) as COOPERATIVE. These models have a long-standing literary tradition. Ask Walt Whitman.
BlazeVox apparently began experimenting with this new model about two years ago. The press has also been transparent about the arrangement (in published interviews and acceptance letters/contracts), though the information does not appear in its submission guidelines. I'd suggest that the omission in the guidelines was a definite mistake, but certainly not one that makes the model automatically "unethical."
I understand it was perhaps a shock to some submitters to receive a "conditional acceptance," especially one that makes mention of money paid by an author vs. the other way around. But I think that's a function of which authors we are talking about, perhaps.
Writers who have already published with BlazeVOX would already be familiar with the practices, or be in a really terrific position to ask about them. If they have questions (or objections) about how the press is run, they are obligated to discuss them with the press, at minimum, before making a public accusation of any kind. (And here I'd say another mistake was possibly made, if the authors already published by the press were not informed of new practices that would be potentially controversial.)
The standard advice is that a writer should be familiar with a press before submitting a manuscript. Extend that advice to the particulars of how the press is run. If you are unaware of how a press operates, how can you know what kind of support to expect if your book is published by them? How can you know the press is the right press for your book? Publishers may not want to divulge detailed financial information (of course), but they should be willing to discuss (or point to an FAQ or set of guidelines that outline) the general gist.
* I'm sure there are exceptions to this blanket statement; for instance, I imagine even the most free-for-all subsidy press has Terms of Service that prohibit the publication of illegal, indecent, or objectionable material (however their lawyers define that, standard disclaimer language blah blah blah).