Personally I think 5% upwards variation range for the peg is completely fine, so I don't see any need to lower the fee further. Many "healthy" fiat currencies vary with each within this level relative to each other and still function fine for commerce.

Also, I think most of the couple percent variation we occasionally see now is just loose tracking with BTC pricing volatility due to low trading volume in the reported markets used by coingecko/coinmarketcap. I suspect if there was a HBD/USD pair, we'd see much tighter tracking of the peg on such markets.