I think there has been a sobering clarity occurring in the upper echelons for some time. The higher inflation rate due to SBD was reported on almost a year ago by @edicted, so there was an awareness of the design flaw.

I have heard talk recently via Whatsup regarding the nullification of most inflation, although based on witnesses and such needing compensated don't see how it would be anywhere near the 1% you mention as a figure. I do think if this occurs the idea that the social experiment (Steemit, Busy etc) will probably be jettisoned. Without rewards most will leave (which could be ok based on many of the posts here made to faucet straight to selling that are low effort).

I remember when I came here and heard terms such as reward pool rape I laughed at the dramatics. I never got mad at those accused of it though, as it seemed to me the flaw rested in the math and a naive assumption on basic human behavior. Give most people the choice of strengthening a community or immediate profit and sadly, most will choose the cash today (bird in hand rather than a flock of birds down the road).

I just can't see the social side continuing if there are no rewards for those paying hosting fees and programmers to fix issues and hacks. Just can't see them dedicating themselves to the monthly out of pocket loss.

I do see where it would attract some investors who stay away due to the high inflation from rewards. How many of those would be pump and dump folks as is common in crypto remains to be seen, although I would assume it would be high at first.

In the midst of all of this, it still seems logical that a new breath of life could be had if Steemit or Blocktrades or even Aggroed with his aggressive maneuvering would tackle KYC regulations and offer an easy buy in of Steem. Most dread the hoops of multiple exchanges and refuse to do it.