Coincidentally, I wrote Down-votes: Steemit's Achilles' Heel? within a day or so before "the experiment" was announced.

While I remain neutral on "the experiment" itself, I do think that it proved the larger point that the downvote represents a major threat to the platform, because it can be used by a hostile entity, such as a well-funded competitor or state actor to severely disrupt and erode the user base. Imagine the negative impact that the experiment would have if abit and smooth were whales with harmful intentions, and weren't "pulling their punches."

If downvotes are necessary, then I think steemit's growth potential is perpetually limited to the footprint that its competitors will tolerate.

I would support something along the lines of your median proposal, although I think it may need to be modified from its current form to be compatible with the blockchain.