RE: I submitted my first hardfork pull request to the Steem blockchain! (Updates to the SBD print rate.)

Except its not a conversion, its a sale.
The steem is not burned, but added to/replaces the inflation created by block production.
We could burn an amount equal to what the blocks produced to lower overall inflation to match demand, if that is desirable.

The procedes from sales goes to the sp holders, witnesses, and authors in the percentages now used.
This turbocharges sbd creation buy selling them directly to anybody with one usd of steem.
As determined by the x day average.

In order for sbd to be adopted there needs to be enough of them to matter.
15m barely makes payroll at one pro hockey game.
With none left over to use for concession sales.
Nobody can buy a jersey because all the sbd went to the players.

By selling them directly supply can meet demand.
Tether has ~2.5b? in circulation, with luck we can match that.
By putting the steem derived from sales into the inflation pool, all stakeholders benefit.

I know there isnt an actual pool, and i dont know how to tie sales to block production like regular inflation, but i was thinking a bot to power up the 25% that gets paid in sp, and adding the balance to the rewards pool.

What i am unsure about is what happens when demand drops and the price of steem goes down.
Existing sbd would have been paid for with one usd of steem, except those paid out as author rewards which have time value attached.
Does the peg hold or does steem defaulting cause sbd to crash, too?

Right now the usd is down 98% but it is still accepted more places than silver.
I guess the trick would be to get enough into circulation that sbd holders refuse to take the loss and continue to use them in commerce on par with the usd.

Okay so you are proposing something like the hyperinflationary model which existed earlier in Steem. That is, greater STEEM supply, but a lot of it distributed back to stakeholders so they don't lose ground.

The three problems I see with this are:

People not understanding it, so they see high top line inflation numbers (even though effective inflation to stakeholders is much lower) and freak out
The high inflation puts the price of STEEM on a downward trajectory and makes the charts look absolutely awful, scaring away investors (even if long term investor stakeholders aren't losing money or are losing much less)
Returning inflation to stakeholders (SP) means that liquid STEEM holders are actually inflated away at the high top line rate. This punishes speculators. Great, you say, speculators are disgusting parasites who should be punished. Except that when no one wants to speculate, liquidity dries up and no one wants to invest either.

Overall I think destroying STEEM to create new SBD demanded by the market is better (sending the price of STEEM on an attractive upward trajectory instead of downward, reducing inflation instead of increasing it, and encouraging, or at least being neutral with respect to, speculation rather than punishing it), though both may still have some issues.

Does the peg hold or does steem defaulting cause sbd to crash, too?

If there is not enough demand for STEEM and its market cap drops, the peg will not hold. There is no substitute for a platform that attracts and retains investor interest.