Hey @serapium! Thanks for the in depth comment. You are right, the system cannot survive indefinitely in it's current state. But, part of the problem with a decentralized platform is you don't leave anyone in charge to mend the issues. As long as Steem Inc do not address these issues with the overwhelming SP they have at their disposal to crush the evildoers (an action they show no inclination to take) then there really isn't anyone with the power and incentive to change the system.
The diminishing returns theory you put forth has been brought up before, with a couple of people actually going to the length of writing the code which would cause votes to provide diminished returns.
Two good follows in this area, if you don't already follow them, are @timcliff and @rycharde. They have both encouraged this sort of amendment to the reward pool previously.
As for us minnows.... we just have to do the best we can with the tools we have on hand. I will say, I pull my SBD rewards out of the system instead of exchanging for Steem and powering up because I feel the need to diversify my holdings into other crypto in the event that Steem were to crumble under the weight of the current system.