Really appreciate the work you are doing, but this sounds pretty terrible.

I powered up a lot of Hive in the last months mainly because I believe that Hive has a future, but also (and I'd lie if I'd say otherwise) because I can get something like 10-15% APR. This is a/the main incentive currently to power up Hive and buy it. It is what is absent in most other crypto projects and if we drop this feature I think the consequences might be quite drastic.

The reasons you gave for holding Hive after we lower curation to about 1/4 (governance and reduced inflation) are not very compelling (since most investors don't necessarily want to get so deeply involved with the chain/ or don't care this much about governance) Reduced inflation (and therefore reducing curation as you suggest) might be somewhat good for the token price in general, but it also comes at a cost of 10%+ APR. Every big investor won't like that kind of a trade.

I strongly suggest we overthink such an action carefully as I feel the thing that would be "fixed" by this would bring more harm to the blockchain at large (with investors leaving - and they will sell - token price will go south). Automatic curation can actually work very well if one reviews the accounts being curated once in a while. Automatic curation, I would argue, is actually one of the major incentives for many users to post at all currently as there is some "guarantee" of getting a return for your post.

Now, while it seems fair that people in group 3 should earn more than people in group 4 (after all people in group two are providing useful work to the blockchain), I think it’s clear that people in group 1 and group 2 shouldn’t earn more than people in group 4.

I don't think this is true at least for group 1. Again, auto curation can work quite well. I am autovoting myself about 70+ accounts currently (mostly minnows) and these votes definitely incentivize the authors to post (in what in my opinion is quality content). Therefore, I think this would count as "useful work" for the blockchain. Of course I am not saying that currently the system is working perfectly and there is definitely room for improvement. But lowering curation to 1/4 is not a good solution in my opinion.