The reward pool isn't some fixed resource. The reward pool grows in correlation with the desirability of SP. My argument is that SP doesn't give enough bang for buck, otherwise people would want it more.

In addition, in a vibrant market people will want to earn and spend rather than just earn. If your hypothesis is correct then that says more about SP and the lack of variable ways to earn SP.

Many Steem Power holders are using it to ensure curation rewards, renting out and selling it to automated services. I'm not sure broadening the scope of the types of things being rewarded can in anyway change those incentives.

You are missing my point. Rewards are in the mind of the Steem Power holder. If people are only earning Steem Power to sell it then it's the platform that has the problem not the Steem Power holder. If the Steem Power holder were a satisfied customer they'd again get enough utility from the Steem platform to buy more of it and avoid powering down unless absolutely necessary.

When we see lots of power downs happen and the price of Steem is flat or going down then this tells us in my opinion something about the Steem economy. I think right now the utility of Steem isn't up to par and in other words we don't get enough bang for our buck or happiness for our dollar.

For every dollar put into Steem something has to come out of it. That something is happiness. So the reward is happiness ultimately. If the platform were making people happy we wouldn't have a lot of these debates so there must be some unhappy people if people are going to power down and sell all their Steem. The incentives if your goal is to make a better world, then it's about maximization of utility, but if the goal is maximum profit in USD terms even if the Steem platform dies then this is a different goal. I think building utility outranks whatever the marketcap currently is, and that marketcap in my opinion eventually will rise to match the utility anyway.