Right now this works out to be approximately ~1.5% interest per year. And this number will only shrink further as time goes on as the rate of inflation falls.
I think your premise is wrong here. The interest is low only at the current level of Steem Power : Total Steem ratio. The lower that ratio goes, and I expect the equilibrium to be much lower than it is today, the higher the effective interest rate. In practice after more people have powered down this interest rate will be a lot higher than today. This ensures that Steem Power makes up a significant but not overwhelming portion of the market cap, by making Steem Power more financially attractive as the ratio goes lower.
you're correct, which is why I made an approximation
I can see that it can act as a hedge against too much liquid steem, but honestly, when the market volatility is about 5% per day, that's a lot of room to make up for
even with very generous adjustments towards liquid steem/SP ratio I don't see it quite making up for it
It might be a great idea when there is stability and when the platform has grown significantly but I agree at the current level it doesn't add much when daily volatility is so high.