C) Bets that pay more than 1%, neither of us participate (if Doog allows investors to choose >1% personal max profit)
No. Every investor bankrolls every bet, in proportion to the size of their investment times their chosen risk.
If there are two investors, both investing 100 BTC, A risking 0.25% and B risking 1%, then the max profit is 1.25 BTC for the first roll. 0.25% of 100 from A, and 1% of 100 from B.
If the player decides to play to win half of the max profit, then A and B both risk half of what they're willing to risk. A risks 0.125 BTC and B risks 0.5 BTC.
This "variable risk" idea isn't designed to let the timid players avoid taking any part in the big max-profit bets. It's designed to allow them to select different fractions of Kelly. A week ago everyone was risking up to 1% of their bankroll when a max bet happened. Today everyone is risking 0.5% of their bankroll to max bets. Once this feature is in place, we'll have both happening at once. But there's no option to say "I don't want to bankroll big bets at all". Nobody in their right mind wants to be bankrolling more than their fail share of big bets. The variance is too high. It's much safer to take a hundred bets of 1 BTC each than a single bet of 100 BTC, given that the edge is the same for both.
I think it would make more sense as follows:
Your first scenario would amount to the same, ie A risks 0.25 BTC, B 1 BTC.
However, in the second case (bet size 0.625), A would again risk 0.25 BTC and B would risk 0.375
Third case, player bets 0.25, A and B would each risk 0.125.
This way only the large bets get asymmetrically filled, while the smaller bets remain the way they are filled now. In cases where whales such as nakowa play, investors would be able to have different exposure levels. However, with smaller bets, things would stay as they are now.