So close, but not quite right.
The uclust algorithm works in two stages.
1. A k-mer filter to quickly list all similar reads in the database.
2. Glocal alignment to select the best hit among the similar reads.
--max-rejects 8 refers to number of alignments (step 2) to try from the list of similar reads (from step 1) to try before giving up. This setting works well because if a good alignment is not generated from one of the top k-mer hits (from step 1), it probably means that there is no good alignments in the database at all.
So it's the top 8 reads from the k-mer hit list, not from the database as a whole.
(P.S. This is why uclust works much better and faster at high similarities, say 80% and 90% and kind of sucks at low identities. At 20% similar, the k-mer hit list will be useless, while at 97% all top hits will be identified through common k-mers.)
I hope that helps!