Nothing is confusing, once you get the basic idea.
The "S Protection price" is protecting the shorts from buying cheap! So if they are called they cannot buy cheap, they can only buy expensive.
That's the general idea behind it!
PS
You are so behind in the theory of the square wheels Xeroc. 
I may be lost in your sarcasm. I get that it is illogical for a bid to stay high, when he can lower his bid and force a margin call. In a thin market this is easy. A thick market would be more difficult. Its not logical to lower your bid when there are other bids still above the margin call price; You may never get filled. All participants would need to play the same game, or you would have to sell into the bid till the margin call triggered, but this has a cost that may be more than the reward.
In addition, a short can always, at any time, manually close his position at "cheap"(when bid is higher than his Margin Call Price), instead of waiting for a forced liquidation at "expensive"(when bid falls below his Margin Call Price).
I don't like the current rules with low liquidity because they are easily taken advantage of but I guess they make sense in protecting the system from there not being enough bid to cover a margin called short. Its only partial protection though. I'm not sure its worth the distortion it creates. Essentially incentivizing the bid to stay just above the SQP rate.
What are you suggesting should be changed, to make this wheel round? Should the short be called only when the feed drops below his margin call price filling all available bids down to the SQP rate(10%)? essentially like we had in BTS1.
I think so long as the markets determining the feeds are external to the Dex and greater in volume the old rule is more practical, but with greater systemic risk. Once the internal markets are leading the feed, I think this issue goes away and really may be unnecessary.