I don't expect Steemit to ever ban the likes of UpVu through fear that the 30+ million Steem delegated to them will leave the platform.

I agree on this. I don't really want to see them banned, anyway. I'd just like to see them encouraged to get better at curating. You're probably right that if no one's going to challenge them, and there are no relevant competitors, the best approach is to just make them less prominent in the front ends.