If you used these numbers, curator rewards would actually go way up for the non-whales who remained in curation

Yes you are correct, curators would actually earn a lot more. The idea is to give everyone in the system a good incentive to buy steem power. We need to get the 99.8% to start investing. I've seen a lot of minnows/dolphins that were very enthusiastic about steem who where preaching powering up a few months back but are now powering down because it literally means nothing to them to power up. The whole dynamic needs to be changed.