I think there needs to be a weighting to high reliability. Because 95% reliability is terrible, but the payout isn't much different from having 99.99% reliability (only a 5% difference), so the incentive isn't there to get high reliability. On the other hand, if you make 95% or below = 10%, and 96% = +20%, 97% = +40%, 98% = +60%, 99%=+80%, 99.9% = +100%, this should put the incentive in the right place.
Discussion earlier in this thread include expanding the delegate slate and payout beyond the current 101, perhaps to 150. Standby delegates #102+ may not have a valid non-zero reliability rate, which may impact payout calculations offered above.
Current approval rates for delegate #102 drop rapidly from ~6% to ~0.6% for delegate 150. Interestingly, the sum of approval rate for this lot is ~101% or on average a 1% subsidy per active delegate to support the standby delegates.
I feel expanding the payout delegate pool beyond 101 has merit, as having a node up to date and ready to produce blocks for the network provides value if called upon.