This would have to be used for higher amounts correct? As you at some point you might want to consolidate those UTXOs to basechain. I would not think you can make payments for 5 dollar values then right?

Since the last holder of the coins has to create one or possibly two base layer transactions to withdraw them, I don't think it makes much sense to create statechain utxos with a value lower than the cost of two transaction fees. And let's suppose transaction fees are $5 apiece. You might think "ok then the minimum value of a statechain utxo should be $10." But that would mean half the utxo gets consumed as fees (assuming a cooperative withdrawal) or up to the entire thing (if he has to do a unilateral withdrawal). If you want to keep 99% of your money (or 98% in case of a unilateral withdrawal) then the minimum reasonable size of a statechain utxo is $500, that way you'll still have $495 in case of a cooperative withdrawal (99% of $500) or $490 in case of a unilateral withdrawal (98% of $500).

"I would not think you can make payments for 5 dollar values then right?"

Under these assumptions, that sounds like a reasonable conclusion. Of course, right now, transaction fees are only like 50 cents or less, so utxos as small as $50 make good economic sense for now.