Apart from a hardcore audience of a handful of (ex)Steemians, downvotes have remained a contentious issue. I think there's definitely an echo chamber and tunnel vision bias that has led to a few of us to believe that downvotes are cool, but it simply never was for a majority of users. I'd been championing downvotes since 2016, but I realized later that it isn't compatible with human psychology given how Hive/Steem is currently set up.

Especially for new and promising content creators that we would like to retain - this being the primary goal of many curation projects in the first place. Imagine being a new user and being greeted with downvotes, it's definitely not a good feeling for most people, and who can blame them for leaving the platform? Attrition rate on Steem has always been sky high, and all the downvote drama only led to more good content creators leaving. Those who say, "Good riddance to the easily offended" are missing the point - we need to create a community that welcomes all types of users, of all cultures and perspectives. That someone is easily offended is absolutely not a reason to shun them - this type of attitude will ensure Hive remains a hostile platform that'll never reach any significant adoption.

So, what I'd recommend is your first option. I.e. keeping downvotes exclusively to objective matters, where there's ample evidence of direct abuse. Remove all subjective downvotes, such as "reward disagreement" or "I don't like this post".

To be very clear, I still like the concept of downvotes, and I hope that we'll one day have a culture where downvotes are accepted, but that's just not realistic given where Hive is at today.