Hey Nicole, totally agree on the need to re-evaluate the Safety Module. We recently put together some thoughts here.
Would your proposed solution work well if an ETH or USDC auction was required to buy whichever token has the bad debt? I imagine the slippage would be significantly less. Any analysis on how your tool would improve those outcomes might be helpful. But note, ours is just one perspective, not sure where the rest of the DAO falls on this scenario.