You raised very interesting and problematic questions @masterthematrix. Probably the greatest minds in Steemit's managment are trying to solve this issue :)
I think that Steemit and related projects definitely should reorganize their structure and make Steem more secure and resistant to speculations, because fluctuations in spectrum from $0.25 to $7 are unacceptable. However, I am not sure if KYC/AML are the proper solution, becuse Steemit establishes community which cannot be limited only to big investors.
In my opinion something needs to be changed directly in the way that content is distributed and rewarded, because it currently doesn't seem to depend on its quality.
All the best,
Jan