The 500 post count refers to the total. Someone with 5k posts can go inactive, come back a year later and be eligible for veteran, but they wouldn't get it - even though they match the criteria. That's what's saiyan is refering to, as most of the people that currently apply for veteran are in that category.
Honestly the system wouldn't change, it'd just be on the forum instead of in the PM. But nothing else would differ from how it's currently done.