Oh of course... SBD being pegged would certainly make this easy to cash out over time. So that really would be enough then. I am now realizing that the reverse direction conversion really is not symmetric at all to the forward conversion because the price feed is on the steem side. Wow.
About my scenario, it's a fun cycle scenario where you can keep multiplying the steem holdings, and tanking the price is part of the scheme. So if tanking the steem takes even less time/volume, you end up with much more steem.
I feel these scenarios need to be addressed before anyone agrees to this.
I have been collecting our discussion into another post which I hope to augment soon.
Your cycle scenario provides a nice window to see the major problem with the proposed two-way SBD peg which is that conversions (even very large conversions) can be done without directly impacting the market price, and this is the feature of the two-way SBD conversions that can be exploited.
I find it interesting that your step 2 conversion is essentially selling STEEM without the sale directly impacting the markets and your step 3 is buying STEEM with impacting the markets.
I've also written a separate post related to what we've been discussing, and I think it can be helpful for people to see both your example of how to exploit the two-way SBD as well as my example.
I agree this issue needs to be addressed. We're doing our part with trying to get the word out there. It would be nice if someone could make a cartoon video explaining the problem in simple terms that is easy to see visually.