Despite my "word salad" you seem to finally get my point, or perhaps you just fumbled upon it by chance.

You rightly moved the focus from "maintaining the peg" to the comparison with fiat currencies and the conditions of "collapse" (especially in the underlying asset).

That's precisely what I've tried to point out:

1. The main goal of a stablecoin is NOT (or should not be) to "maintain the peg", just like the goal of a currency board is not to "maintain the peg" but rather to heal the underlying economy. "The peg" is thus merely a means to the real end, which is to facilitate transactions, to stimulate an "economy" (crypto economy), to allow for a smooth integration between the "crypto economy" of the underlying asset and the outside fiat economies. Saying that "the purpose of a stablecoin is to maintain the peg" is akin to saying that "the purpose of the dollar is to maintain parity with the euro" (or the other way around). A credible algo stablecoin creates or strengthens the economic bridges needed for the cryptoeconomy of the underlying to "trade" with the much larger fiat economies. This is the yarstick one should use when looking at how good an algo is
2. Yes, an algo can collapse and most present-day algos are ridiculously easy to make collapse ...because their underlying cryptoeconomies are lopsided and tiny. But even fiat currencies collapse regularly, despite being backed by central banks which have "unlimited liquidity" and their citizens to hold the bags. They can "collapse" both internally (in my definition, of an economic collapse) AND "externally" (in your previous definition of "breaking the peg with whatever currency they had a peg with"). Think at the recent collapse of the Sri Lankan economy, at the "external" collapse of the Turkish lira, at the regular collapses in the Argentine peso, at the Greek and Cypriot crises back in 2011 - 2013, etc. Further back, think of the 1991 "collapse" of the British pound when it broke the peg to the ECU that the British government and the mighty Bank of England, the famous "Old Lady" were committed to defend! Economies collapse, fiat currencies collapse despite central banks with unlimited pockets, despite having millions of users. So yes, algos are going to collapse too, and more often than fiat currencies, but NOT because they are inherently worse than fiat currencies, but because their underlying economies are much, much smaller and a lot more imbalanced.

In short, there is nothing inherently bad about algorithmic stablecoins. They shouldn't be expected to be more stable than what the size and health of the underlying cryptoeconomy warrants. A "bad" algo is one that ignores the M * V = P * T equation of central banking and has no "circuit breakers" built in. But good algos can be designed. Even they are not going to be insulated from a crash in the underlying cryptoeconomy though, so ... simply don't focus too much on stability, that's mostly a marketing decoy. What you should focus on is whether the algo is spurring investment and growth in the underlying cryptoeconomy.

By that yardstick an algo should be judged, not by how good it is at maintaining the peg. UST was poorly designed with no "circuit breakers", there was no underlying LUNA economy to speak of (aside from financial engineering), so yeah. But that doesn't mean "there can be no good algos"