Personally I think it would make sense for those Steem DAO SBDs to be used to buy Steem, thus raising the price of Steem and dropping the price of SBDs.

This rings a bell and might be what's being discussed. It feels like a long time since I last heard about it though - hopefully it's still a possibility.

Burning the Steem at that point might not be terrible (although seems wasteful to me, seems like it would be better if it ended up as SteemPower in the hands of people who use it to make the chain a better place, but finding a fair way to identify who that would be is not a simple question).

That's always been my mindset too but there will always be problems finding the people who improve the chain. So often, it's the people who earn their way into Steemit's trust and get access to booming support or steemcurator accounts who find the temptation too much and start creating and upvoting their own accounts.