it currently is growing: 1 MB per block.
Blocks have been larger than 1 MB for several years now.
what if a block was published that was X bytes shorter than this limit
There is nothing currently preventing miners from publishing smaller blocks if they want to.
"Redeem Nonce" would simply allow the mined block to exceed 1 MB by up to X bytes. Miners would tend to include all such transactions in the mempool where X is no more than the actual size of the transaction, because it would be free money: they would get all of the associated transaction fees while not using up any of the 1 MB space allowed.
I suspect there are several issues with this, but the first that comes to mind is:
This seems like it would open an avenue for a significant attack. Couldn't a malicious party "Reserve" space as much as possible every time fees are low, and then after a few years "Redeem" all the reserved space all at once in a HUGE block?