You don't think the awards would benefit from opening up the nominations process? It's just that 78 votes to get your story up there seems waaay too cosy to me. But hey, different strokes and all that.
They are open - the only requirement is that people pay the membership fee and bother to nominate. Note that since the amount of actual voters far exceeds the amount of nominators, it's not the fee that's the issue - it's the fact that most people aren't particularly motivated to nominate. I'm guessing that, after the events of this year, this will change, at least for a while.
I take your point that the hugos are just a world-con thing, but in my mind there were always something much, much bigger. Like the oscars for sci-fi.
The oscars are voted for by a group with restriced membership - you can't just join the MPAA if you're part of the audience, and you can only nominate in your own branch if you are part of the MPAA. According to a google search, the best actors, for example, were nominated by a maximum of 1176 people last year (there are no public stats on how many actually nominated the winning actor) - that sounds like a lot more than 78, but when you compare the size of movie audiences to the size of SF readership, I don't think it's a significantly higher proportion.
The Oscars are actually more comparable to the Nebulas than the Hugos, because the nebulas are also not votable by the general public. But all big awards generally involve a small amount of people voting and/or nominating compared to the size of the audience who is interested in the awards.
I'm sure a lot of people would like if all the sad puppies up and left to create their own awards, but realistically I can't see that happening. I think they should lower the price of the on-line membership and get more people involved. If enough people vote it will nullify whatever 'slates' the puppies put forward.
Lowering the price will just make it easier for anyone with a political agenda (puppies, anti-puppies, scientologists, etc.) to recruit non-SF readers to nominate. It might be a good idea for independent reasons, but unless it's paired with a significant change in voting rules, it will just make it easier for a slate war to emerge.