In this case it is printing, holding and releasing, it is printing with extra steps.

That "holding" (buffer) makes all the difference. Because even if we were to take a very drastic step to stop inflation inflows to DHF, it would only affect outflow gradually and after long time. Your proposition cuts the outflow abruptly.

If that same governance power can approve liquid HIVE payouts during stress, then the stake lock is partially bypassed through the treasury.

How does "during stress" matter here? If you see DHF outflows as "stake lock being partially bypassed", then it is true whether "during stress" or not. But governance power approving liquid payouts is a feature, not a flaw.

and here is where your idea of the DHF paying HIVE would lessen the problem

Just to be clear, that is not my idea, in fact I oppose it, because it entails part of the bad consequences of your proposal. I mentioned it just to point out it was already discussed.

My concern is that DPoS stake can approve liquid treasury outflows ...

Dan already told you, but it did not seem to click with you, so I'm going to repeat. In DPos stake can approve anything and everything. It can dictate what the consensus is (through voting for witnesses that would activate hardfork that includes certain changes), so approving liquid treasury outflows is trivial in comparison. This is defining feature of DPoS governance, not a flaw. That is just how DPoS works. We wouldn't have DPoS if stake was not connected to decision making. And the reason for it is simple - those who hold the stake pay for everything proportionally to the stake they hold.

You also have it backwards. Under current rules DHF transfers out funds every hour no matter what stakeholders decide and the amount only depends on DHF balance. Stakeholders only direct those funds to selected proposals. It just happens that we have two proposals that return received funds back to treasury - the "spend it later" return proposal and "keep internal market alive" hbdstabilizer (which should be several times bigger IMHO).

... during the same period where the protocol is suppressing HBD elsewhere

Each source of new HBD serves different purpose in the protocol and is affected by different mechanisms, so whether it should be supressed or not and when depends on that. HBD for author rewards is suppressed because it has least impact on the Hive users while curbing the accumulation of new debt.

This is DPoS, not pure PoS.

The difference is that even the small stake matters.

No more DHF funding because hbd_print_rate is zero.

I don't know how you don't see that it is exactly the critical failure of your proposal. Under current rules when debt ratio is rising above 20%, the protocol reduces production of new debt where it least affects the function of the chain and alternatives are not feasible (users could start to downvote everyone that used default 50/50 reward split, but it should be clear why relying on it to reduce HBD production would not be a good idea). Other sources of HBD already have viable controls (return proposal for DHF, witness controlled APR for HBD interest) so the stake holders can collectively decide at any moment how much new HBD those sources produce. As the debt goes towards haircut level, HBD holders have more and more pressure to convert at least some of HBD to HIVE, thus reducing debt ratio. Even when chain hits haircut rule at 30%, the "default on debt" is only partial, everything still works, albeit the chain reputation suffers somewhat. Under your proposal DHF stops working at 20% instantly. No work can be funded, not even the one that could potentially change the situation. The chain becomes adrift with no initiative, waiting for market conditions to magically change for the better. I know people are used to work on Hive being funded from external sources or not at all, but if a company cut its spending on work to zero, it would also receive zero work, which is basically a total and instant bankruptcy. The cherry on top of the sad pie would be that hbdstabilizer would not get funding. Removal of important market maker would cripple internal market (this is also why paying DHF in HIVE would be a failure as well).

Because the bottomline is that the DHF is materially paid, at the end of it all, by people buying HIVE!

By people holding HIVE. If you paid 5c and the price is still 5c then you only "paid" the tiny fraction related to how much inflation added. Those who keep liquid HIVE pay that for the ability to quickly react on market fluctuations. Those who stake their HIVE have their funds locked by the protocol, so they carry all the financial risk and ultimately pay for everything that needs paying on Hive. That is why they have the say in how Hive works and where to spend the money.