Witness rewards are already likely on a trajectory to be much too small in Steem unfortunately. The way the system was set up, total inflation declines and witness rewards remain a fixed percentage of the total. So in the end state (18-ish years from now), witness rewards will be 0.09% which is a tiny security budget by the standards of most cryptocurrencies (excluding the ones with fixed supply but there continues to be more and more skepticism about that model working, for example see recent BIS Bitcoin paper).
For now, trimming off a bit of the roughly 0.85% witness rewards might be okay but as you said they're still pretty small in the scheme of things (and this is true both an absolute and percentage terms). I would not support a long term reduction in witness rewards though, as I think long term they are already on a path that is too low.
What about witness rewards being paid in SBD instead? The witnesses would prob like it under these conditions, but would be against it if steem ever went to $8+ again.
I don't think a fixed witness pay makes sense.
Part of witness pay (arguably the bulk of it) is for faithfully serving and securing the chain. If you have (hypothetically) $10 billion chain and witnesses being paid say $30K/year, that is a recipe for disaster not only in terms of scaling costs but also security. It may be fine when the value is only $100 million. But as the amounts of value at stake scales up, witnesses can easily be corrupted by outside influences worth more than their $30K/year position, but with significant negative costs for the success of the chain. You really want witnesses to be very well paid if the chain is worth a lot, ideally with more to lose from losing their witness position than to gain by acting against the interests of the chain/stakeholders.
I think a reasonable percentage per year makes sense, something likely in the 0.5% to 1% range, although the exact numbers may be up for debate in the future when we have more understanding of blockchains being used and critical to a rich, mature, economy.