You may argue that it's in everyone's best interest for us to use our free downvotes wisely, but if we could cooperate like that, we could make linear and 25% curation work as it's to everyone's detriment that we all engage in content indifferent behavior. Yet here we are.
I don't find the situations analogous at all. Altruistic or socially-optimal voting under the current system has an obvious and huge immediate cost, so it is a pretty easy to expect it to be heavily disfavored under the current system. To cooperate and sustain it would be a huge effort with large coordination cost.
By contrast, free downvotes have very little direct cost. There might be some retaliation, but that also might be implausible (if someone is downvoted by 5 or 10 different voters, are they going to retaliate against all of them; vote power limits alone might make this impossible). It is far more likely to expect that some altruistic or non-myopic self-interest to kick in there, when the cost is much lower, the way it does when people make small (positive) edits to wikipedia and such.
I would agree it may not be sufficient, but I don't think it is clear it is insufficient just because it isn't directly rewarded and therefore perfect game theory might suggest ignoring the option altogether. Though to be perfectly mathematically precise, if you have any active content eligible for a payout, downvoting does benefit you, however slightly, and likewise, long term good-of-the-platform considerations also benefit you, if also slightly. Again, it is more likely to expect these considerations to matter when they aren't offset by a huge direct cost. After all, it doesn't cost much to physically click downvote if you don't like something, as people do millions of times per day without any incentive on reddit, etc.
BTW, I do think downvoting (assuming it happens a reasonable amount, which is uncertain; see above) brings price discovery, not directly, but via its effect on upvoters. That's precisely non-linearity in action. Upvotes have more 'oomph' if they don't get downvoted, just as they would have more 'oomph' if combined with other upvotes (or, at least, more stake) in a superlinear upvoting system. So people upvoting who want their votes to have maximum value (either for curation or reward purposes), a natural desire, need to consider what is more or less likely to be downvoted. That brings price discovery. In the extreme case, if you upvote for N rshares and get downvoted for N rshares your vote then has no value at all. That's clearly inefficient and unprofitable voting you would prefer to avoid.
I feel we've fallen into the trap of narcissism of small differences.
I did concede that in practice this is less likely later in my comment which you covered in your first two paragraphs above. Whatever differences of opinion we have regarding downvotes are relatively academic and negligible in practice. I support X% free downvotes.
The conversation in chat with the group was, perhaps unsurprisingly, not too constructive. Right now we have an economic system that rewards content indifferent behavior 4x more than voting behavior that's beneficial for the platform. Maybe adopting 2/3 of our measures is sufficient to turn this around if superlinear is out of the question.
Ideally I think it's better to have a system that still leaves enough to incentivize authors and I think something similar to our proposal can get us there. Failing that, 100% curation which you proposed or no inflation rewards other than paying witnesses (they're similar in some ways, obviously not identical) might be entertained. This basically will be like reddit, where there's no rewards so no incentive to act dishonestly, but with a crypto wallet attached. I think this isn't great but it could work.
I'm reluctant to try this path without at least a serous attempt at making this place work as it was initially intended. I don't consider hyperinflation, n^2, 25% curation, linear very serious attempts. But of course, it's not up to me, thanks for your time.
I'm not sure that discussing small differences is narcissism, but I agree with the core message there. Clearly we agree on most of this voting incentives issue and have agreed on most of it since the first discussion of it (several months ago). It is the people who don't agree with it to the same extent or at all who are getting in the way of something being done, not you or me.
BTW, I'm not sure if you are aware but the original policy mix was hyperinflation, n^2, 50% curation. The switch from 50% to 25% was very foolish and I disagreed with it at the time. The 3-1 ratio to overcome is terrible regardless of the curve.