My guess was that the conversion process stops working, but the reality is that SBD simply stops being printed. So the reality is much simpler-- blockchain stops giving out SBD when a threshold gets hit. I suspect not a lot of people know this, and it matters a lot for the monetary policy.

Actually I never really did the thought exercise for what would happen if we got to that regime: SBD stops being printed, all payouts are in STEEM... STEEM value decreases... In theory should correspond to a corresponding drop in SBD value and maybe the market would work itself out. Don't know. But in this region people will surely be more confused when they realize they aren't getting SBD anymore.