You are correct as far as the 10% limit. It is not necessarily catastrophic to pass that point though. It just means that SBD holders would get less than $1 USD for conversions if it passed that point. It is a linear reduction down, so at 11% debt limit, SBD converters would only get slightly less than $1 USD of STEEM for their conversions.

I did add some additional thoughts on the same subject in reply to @bacchist's comment above.