We all want a free market to establish itself. The problem with market limits and interventions is that they prevent the key thing market participants demand - liquidity. And this ultimately stains the market and prevents its future growth more than does volatility. I believe the price should float freely.
So what if its a bit chaotic for a while and looks like a casino. That will attract more users, who will come in with more strategies to take advantage of the initial distortions and that ultimately will lead to more normalised price behaviour. Remember the early days of BTC? Now its volatility is naturally decreasing, which over time increases its utility to merchants and customers, increasing usage in a positive feedback cycle. I think constantly shutting this market down just reduces user growth and impedes this cycle.
Having said that, I think the peg would ultimately be better behaved if the underlying collateral could be more mature and independent of the platform itself. As it stands, instability can arise if BitUSD peg is distorted, lowering confidence and BTSX prices, reducing liquidity and distorting the peg further. It will be interesting to see what variations on the current collateral structure are possible.