Yes, the masternode reward far exceeds the cost to operate a masternode on face value. Are there hidden costs? Maybe, cost to acquire 1000 DASH and not trade or use it for another investment maybe?
That isn't a cost, it's a capital investment and so cannot be offset against the operating revenue of a masternode. Doesn't affect the margin. There are no hidden costs (I know cos I've run one for years).
Why would anyone hold a masternode right now if the rewards were reduced substantially?
This depends on how you denominate the "rewards". Since Dash isn't a stablecoin the reward is dependent on the exchange rate. At it's peak, the masternode reward was around $83k per projected annum. Right now it's around $5700 per annum. I ask you the same question: "why would anyone hold a masternode when the potential capital loss far outweighs the reward itself ?"
The idea is that by restoring the mining reward we'd become more competitive in terms of investment (by needing to draw less capital from fiat markets as I've outlined in other posts) and restore price growth. This would INCREASE masternode rewards, not decrease them.
I realise this conclusion I've drawn is counter-intuitive but it's rational all the same when you work through things on a fiat measured basis and consider the cryptocurrency market as a whole rather than simply draw a line around Dash miners and masternodes. It also has observable evidence on its side while the current proposal does not. 10% change may not seem much but the problem is it's in the wrong direction.