I've thought about this for some time and eliminating the reward pool on steem makes a lot of sense. I am not sure how that would impact prices as its the main driver to hold steem in the first place as of right now, but perhaps the decrease in new supply would potentially offset this over time?
Making steem simply a base layer with minimal inflation (1%) while letting all the SMT projects take on the POB stuff seems like the best way to go to me overall...
The negatives would be less demand for steem at least initially, and it would likely cement the witnesses in their current spots.. sort of the problem that EOS block producers face...
Overall though I have a feeling that the current setup is not likely to succeed in the long term and I think making this change is probably the right one to make for the long term sustainability of steem.