Good post. I think it's great that you took the time to read the whitepaper. If more people understood the principles behind the system, I think there would be less frustration.
One thing to keep in mind is that the whitepaper is out of date in a few areas.
I know it's out of date. I think the reliance on zipf's law is where there is a miscalculation. Zipf's law is not encompassed in its true form in here because of the fact that the SP holders are the ones influencing the payouts. I'll be going into that in upcoming posts. Virality when basing it on a handful of powerful people's preferences is not true virality. It has the potential to get worked out, but when the system is designed using zipf's law, I don't think it will help this platform. Zipf's law describes a rich get richer, poor get poorer mechanism. 85% of the population will not be interested in such a system.
IMO, it really boils down to there not being enough rewards in the reward pool to go around. Even if the 'whales' were not the one choosing the posts, then you would probably just end up with a popularity contest. People like Justin Bieber, Brittany Spears, etc. would be getting massive followings (like you said in your post) and then people would just switch to who they were complaining about.
There is about 7k in rewards to be paid out each day (with current prices). That includes curation rewards as part of the payout. Even with 1,000 active users posting decent content, that's only about $7 per person.
I think having Zipf's law less drastic could result in better engagement. I'm in no way in favor of some totally equal system. What I have noticed is that the drastic curve doesn't mesh with human emotion. If a site carries too much of a negative cognitive load, it's not going to work. It really is that simple. Humans operate on an emotional basis.