That said, if people could somehow participate more, LessWrong could transform itself into an interactive forum for smart and curious people that's head and shoulders above all the others.

This is already happening. Topics and post quality and comment quality used to be more tightly controlled, but now it's much more accessible and much less intimidating to post something (for better and for worse).

The major obstacle towards something like that isn't the people, it's the software that the community is run on. Unfortunately we're running on a years-since-forked fork of the confusing reddit codebase, and it's probably not feasable to update everything. All the requested features, such as more subreddits and stickies, would if implemented allow the community to grow. But so far that's stagnant, because it's not worth the time and energy.