Some of those questions might be best answered by the creator of Steem or SteemIt.
However, I can clear up the fact that the 3.5 witness feed rate does not care about the market value of SBD. It cares about the value of STEEM and uses that to make the conversion between SBD->STEEM.
So if the traders keep pumping SBD, users will be able to sell SBD and buy STEEM and create more and more SMTs. This is the opposite of prohibitive.
Example from Steemd.com demonstrating SBD as the base independent of exchange value:
Thanks for the response. Trying to understand this all better myself and you're among the few Witnesses that has ever acknowledged the questions so I appreciate that.
Getting mixed messages though because I've seen other Witnesses say they are fine with the ongoing free market price discovery that is occurring with SBDs. Most recently @aggroed said in an interview with @jerrybanfield: "The other debate that I've been able to partake in a lot is, what should we do with the SBD? My response is, help it be as high as possible because this is good for the platform."