It means the debtors who have maintained their positions better will be forced to buy the bad debts. I don't think it's desirable by those people.
Under the current protocol the strongest positions are closed because of the weakest ones. And they are forced to sell at the worse possible price. Let them decide what's desirable for them!
As long as a debtor has collateral above MCR, he will never be force-settled.
Debt asset holders will be unhappy to see this.
The conclusion "peg is maintained" is not proven.
They are much more unhappy now, given that in BitEuro, for example, they cannot force-settle more than 10 Euros each hour.
Now, regarding the peg, it will always be maintained unless the last, strongest position breaks. This is much better than current situation when peg is broken when the weakest position defaults which, naturally, happens much more frequently.
What LP? Who deposited to the LPs so that there are sufficient debt token to be used to buy or force settle the margin wall?
To be honest, I think it's just wishful wish. Simply speaking, when the market is in a bear trend, the debt assets are being hoarded, there is no liquidity in the market nor in liquidity pools, no supply to be used to close debt positions nor to buy into the margin wall.
Every LP that has the corresponding smart-Asset. And they don't have to have enough of it. Reducing the size of the margin wall is already an accomplishment. Please keep in mind that this is not a proposal to eliminate global settlement, but to drastically reduce the probability of it happening. Anyway, as the initial post says, this point is optional. Other players, not necessarily at core level, can do this arbitrage.
Best for all!
Sapiens