Either way would work if you're trying to benefit the community. The ways in which they provide the benefit are different.

Burning the rewards decreases the supply of Steem in circulation, so it increases the value of each existing Steem token since there are now fewer in existence, so they are rarer.

Declining Payout doesn't accept any reward, it just distributes to other posts during that payout period. Therefore, it benefits those who are actively posting. It wouldn't provide a boost for those who have already been paid out, but would provide a greater relative reward to the posts still pending.

Again, if you're wanting to benefit the community, either option is great. They just do different things.

Thanks for the discussion!