It's needed in the sense they needed a currency to pay people for their interactions, which is why the reward pool was born. However, with your ideas, no reward pool, no reason for a coin? Just pay people a portion of the ad revenue generated in USD. I think your model is interesting but I do think with some tweaks steem could be usable as well.

Why does bitcoin, ether, ltc, and just about every other coin have value? There is no fundamental value there either... which is why I don't think your comment about steem going to 0 because it is not needed is accurate.