How "short lived" the highly collateralized positions are is irrelevant if you always have compete to put up high collateral whenever you re-short. It may not have made a huge difference overnight because there are still a lot of low collateral positions out there, but if those are forced closed or we started the system with collateral prioritization from the beginning then you would see the difference.
Ok, let assume for now they are highly collateralized (not the main objective of your proposal, (but I agree that finding a solution to increase collateral it is good) ,btw). How this makes the peg tighter?
Example from new system:
You use (tie up) $10,000 worth of BTSX to post a large collateral to short 1,000 bitUSD into existance (at par)… 15mins later someone offers for sale 1,000 bitUSD for $970… would you cover?
Sure why not, you just made $30 in 15 mins, and you can get right back to the front of the shorting line by putting up your big collateral again. If you have a robot doing this you are making $120/ hr.
What is the alternative, wait for that 1:10 amount of leverage to give you a little extra gain if BTSX rises… not worth it, much better to take the easy money from people willing to sell cheap bitUSD.
In the prior system:
You used your $10,000 worth of BTSX to short 10,000 bitUSD, You only got $9,500 worth of BTSX from the buyer ($500 went to fees because you were competing on fees.)
Now you see someone offering to sell bit USD for 0.97 on the dollar (selling 10,000 bitUSD for $9,700)…
Do you buy it and cover? Of course you don't buy it because you would have just lost $200 by buying it, it doesn't even cover your fees. You will just sit and hope for BTSX to rise.
Result:
Original system: short doesn't buy bitUSD priced at 0.97
New system: short does buy bitUSD priced at 0.97