Turns out this min(price_median) is just a temporary price to ensure more collateral is put in.
This. Obviously, there are consequences. While it cannot turn a winning trade to a losing one, it makes your trades smaller in a volatile environment which greatly reduces the power of parlaying (nesting) the conversions as extra HIVE gets locked up compared to calculations that expect median (so no $2 perpetuum mobile in practice).
Yes it reduces the size faster ... when you keep converting HIVE to HBD and selling the HBD for HIVE