You need to be thinking in terms of reward per block. Of course the 33% miner should get about x33 the rewards of a 1% miner, simply because he's bigger. What we don't want is that the big miner would have more than x33 the rewards (superlinear gain). What I've shown is that the big miner actually gets less than x33 the total rewards of a small miner, or in other words, that the reward per block is smaller for the big miner.
This is simultaneously the best feature of the proposal, and the one most likely to prevent it from becoming part of Bitcoin.
Ok. I was primarily refuting the implied claim that this formula would make sense when applied to Bitcoin.
There was no such claim, implied or otherwise.
The coins are fundamentally different, but the similarity of this feature would have provided a good place to have started, if you had known of it.
Better late than never though.