anything wrong with offering 1.56% house edge? (higher than 1%, but lower than satoshi dice's 1.9%.) and matching kelly.
No, but why would anyone play your 1.56% edge game when there are reputable 1% edge games available?
Almost nobody plays satoshidice any more, because they don't want to pay double the house edge of the other games. Why put yourself at a disadvantage?
TBH, I do not think the majority of gamblers even know what a "house edge" is. I have friends that still think slot machines at our Indian Casino are beatable.