I believe you've hit on the core of the issue right here:

"While it seems fair to give back some to ourselves, using 50% or more of our voting power to just give rewards to ourselves and our friends not only pays well but puts us in a position to continue doing it more in the future. Making upvoting circles, alliances to do vote for vote, and doing self upvotes along with votes for friends and family means success is extremely challenging outside of those systems."

The fact is, Steemit's game-theory strongly encourages exactly what you are pointing out is happening here. Because of the snowball effect of cumulative "interest", which is essentially the same effect you get by voting yourself, you end up behind everyone who does it if YOU don't do it.

I don't have a good solution, but I think curation needs to be much more rewarding somehow. I also hate the 30 minute anti-bot rule, which I don't think actually disadvantages bots in any way. Be nice to get this done without substantially reducing the rewards pool, too.

Excellent analysis, Jerry. I really liked the "circle graphs/pie charts".