demand always fluctuates over time
What is important is not merely whether demand fluctuates, but whether and how much it fluctuates (or can be reasonably expected to fluctuate) as a direct result of an individual's actions. Fluctuation, in and of itself, does not tell us anything about the best actions to take. I could do something absolutely horrific qualitatively in terms of Steem's value, and Steem could still go up in value! I'm only small stakeholder, even if, relatively speaking, one of the largest. When it comes down to it, my little actions just aren't that important (and the same can even be said for @freedom, etc.)!
Short time this is true, but the longtime life of Steem is dependent on the market's demand over an extended period of time.
Long term is just the sum of a series of short terms. If you want the long term incentives to work you have to fix the short term incentives. That is a mathematical fact.
but that would decrease the demand for Steem to the point of not being the most monetary rewarding strategy
Not necessarily. We've already discussed this.
Or even if so, @freedom could easily create 100 sock puppet accounts, post cookie cutter content that appeared to be meaningful and upvote those instead.
on the overall value propositionBut even if that weren't the case, @freedom is only about a 3% stakeholder (as far as we know). Whatever @freedom does even with n^2, still has limited effect (see above). The perfectly rational thing for @freedom to do is to maximize @freedom's wealth with self-enrichment, which is pretty much what @freedom has always done (first with dumb but exploitative curation bots, now with bid bots). If you don't think so, then you are arguing that someone who seems to be a pretty smart dude and objectively one of if not the most successful Steemian who turned nothing into $20+ million by behaving very smartly at every stage is and has been doing something very, very wrong. I don't think so.
My very serious suggestion to you would be to spend some time with a pencil and paper and work out some very specific scenarios in terms of hypothetical (but plausible) stake distribution and also hypothetical (but plausible) numbers on how much these individual decisions effect the overall Steem value. If you do this you will find that the way the numbers work out, it is almost impossible for self-enrichment to ever not be the best individual strategy regardless of the reward curve (for each stakeholder who isn't already almost completely disenfranchised by a heavily top-heavy weighting system).
If this has been done early on, the white paper and overall design would not have made such obvious blunders. Either no one did this, or they didn't care because the goal was to launch a coin with a compelling-sounding story to cash out on a big pump, whether or not the mechanism for what it claimed to be trying to accomplish actually worked.