2/ Possibly write a software upgrade that would allow the SP inflation rates to be adjustable by witnesses so that they can be adjusted down. (Essentially make the environment attractive for short term speculators.)

I have been suggesting something along these lines. Though I am not sure that a mandated value (voted on by witnesses) is the best approach. I have proposed throttling the conversion rate that results in SP inflation/interest based on the percentage of steem in the vesting fund.

Right now, the overall money supply is increasing far too rapidly. This is due to too much of the money supply held in a form earning the highest possible interest. If we can throttle that interest and promote a more stable relationship between SP and liquid Steem, we can achieve the goal of SP balances which are immune to the dilation effects of an inflationary monetary policy. As of now, the money supply is growing at a rate which can't be compensated for by SP interest (which is ostensibly a buffer against inflation/dilution).

Your statement implies that the interest rate should be adjusted down. And that is clearly necessary. But I don't think it should be up to a vote, based on the preferences of witnesses. For better or worse, witness behavior is the result of political considerations, and pressure can be placed on witnesses by SP holders. Monetary policy should be insulated to some extent from political manipulation. I'd prefer to see the vest to steem conversion rate respond to the market and user habits in such a way as to enforce a determinate rate of inflation.

In the short term, this means that a lot of the Steem that is held in SP balances needs to be liquidated. That might result in some overselling, which is unfortunate. But it is an important step towards stability.