Hey Andrew,
The slash is there primarily to ensure bakers behave. Slashing discourages bakers from trying to game the system. While the value of the xtz on the key is the incentive a baker has to secure their node. Sure there is light overlap but they are separate incentives that work together to secure the network.
The max delegation argument is somewhat of a strawman.
Very few bakers are fully delegated. Having extra XTZ available signals to delegates that there is space and how much. And with today’s key system if someone gets their key they can still drain their account by waiting for the coins to unfreeze. Plenty of reason for hackers to make the effort, and plenty more reason for bakers to secure their nodes.
Lets take a look at your baker Happy Tezos, you currently have 274,213 XTZ available or $685k. This immediately available bounty is why your rightly are obsessed with security, not the slashing mechanism which discourages bad behavior.
If you scroll up, you’ll see that I said “This would take years to play out”.
Yet changing incentives to allow sloppy Baker setups will have negative effects on the networks security long term.
-Justin
