What would happen if the blocksize were increased to 1 GB tomorrow? Pretty much nothing. Miners will always be able to create blocks less than the maximum blocksize.
What would happen if the blocksize were decreased to 1 KB tomorrow? Bitcoin would come grinding to a halt.
Too small blocksize = death to bitcoin.
Too big blocksize = non-issue.
I'd rather see the blocksize too big than too small.
IBLT makes it an issue because there would no longer be a risk/reward tradeoff on tx fees vs propagation delay in building the largest possible blocks. As a result the miner is incentivized to always build the largest possible block to collect maximum tx fees with no propagation risk.
IBLT encourages good behaviour because you can't successfully publish an IBLT full of transactions which the rest of the network doesn't want, unlike now, when a block could be full of rubbish 1sat transactions from a secret spam generator. The whole point of IBLT is that each node knows (and accepts) most of the transactions in advance, and has them in its mempool. It is only a smallish set of differences which are required from the IBLT when processing it. So the fees market should be helped by this development.