In the current state does placing a bounty on a question count as earning negative rep on the daily rep limit? Currently I believe that one can only earn 200 rep daily. Thus, say user foo has 800 rep today. Then he places a bounty for 50 rep on question bar. Now he is at 750 rep. Now if his stellar answer gets 25 upvotes will he be at 1000 reputation or only 950? Should he be allowed to?
You can earn a maximum of 200 reputation from upvotes per day. This limit is not affected by either placing or earning bounties.
For the scenario you describe in your question, the final reputation count would be 950.
Related post on Mother Meta: How does proposing a bounty affect the reputation cap?