If the avg transaction fee is greater than 1% then the block size limit increases;
If the avg transaction fee is lower than 1% then the block size limit decreases;
Please be more explanatory; 1% of what? Of the transacted amount? Of the block size? In this case, 0.065 BTC? There are lots of factors involved when you have to make such change, especially if we include Segwit and other ways to reduce your transaction's size. I think that this way, the miners will prefer some transactions despite on the fee they're paying.
I have to agree with ranochigo for the block size.