We got into YC only the 3rd time in summer 2011; applied for the two earlier batches. Both of our earlier applications had bad ideas and very little traction.
I'm also curious to hear the answer to this question. Last time I applied, it was only with an idea that had not yet been implemented. Now, I am waiting to see if my current idea has traction before applying to YC. I think they see traction as a very important factor in accepting you into YC. I might be wrong though.
I have no experience with HN personally but I remember pg saying they tried to ignore early signs of traction, as there's no correlation between how far a company is when it's accepted, and how well it ends up doing.
So, don't give up.