You've got the mechanics right and the premise wrong. The 1 sat/vB floor was never
a price floor. It was a relay default in Core, minrelaytxfee, and a floor only
earns you money if there's demand you're turning away. Blocks haven't been
reliably full. The space under that floor was going out empty. A 0.1 sat/vB
transaction isn't taking a slot from a 1 sat/vB transaction, it's taking a slot
from nothing.

Second, you couldn't defend it even if it were worth defending. It's a cartel with
no enforcement mechanism. Any single pool that relaxes its floor out earns every
pool holding the line, submission paths around the public mempool exist, and there
are enough of us that somebody defects on day one. Fee floors need unanimity among
competitors who don't much like each other.

Your bidding ladder point is the good part of the question, and it's correct.
Fractional bumping does compress the increments. It only costs miners money during
congestion, though, and during congestion the clearing rate is 20 sat/vB and what
happens down at 1 is irrelevant. Sub 1 sat/vB is a symptom of a slack market, not
a cause of one.

How I felt about it: fine, we reconfigured. It cuts our costs too, since our own
payout transaction is our single largest expense when fees run hot.

The thing worth being annoyed about isn't the floor. It's that we're arguing over
tenths of a sat while fee revenue is a rounding error in the security budget. No
relay policy manufactures demand for block space.

I was really surprised that we got sub 1 sat/vB fees last summer.

The free market decides the minimum fee. F2Pool tried to enforce a 5 sat/vbyte minimum in 2018, and had to concede to the 1 sat/vbyte floor allowed by their competitors: https://mempool.space/block/00000000000000000019f48d2b138c03afb5741479c59b808c42e352a5011ff6