Hey everyone, first of all, I appreciate that @joepetrowski has started this discussion since I also started to wonder about this recently.
First a bit of background, I am the founder of Polkadotters - half of our “business” is to run a media house that publishes news, tutorials and reviews from the Dotsama ecosystem and the other half is actually running validators and collators. We have been on Statemine from the very beginning and now we have joined Statemint as well 
I’m not sure how far you are with implementing or re-thinking the reward system, but I just wanted to add my 2 cents. There are already some parachains that have successfully created their collator set by governance votes of their respective councils (Centrifuge or Calamari for instance) and this approach makes actually quite a lot of sense
- Since collators don’t provide security, parachains don’t really have to take into account the size of the stake (just a size of the initial bond to keep “skin in the game”)
- It kinda equates the opportunity to get into the set for both big players (staking companies) and community collators like we are (if it’s desired to have a diverse collator set - which should be)
- Community collators also tend to perform more scrutiny and take their job very seriously - since Dotsama is our only focus, our reputation is everything. Obviously, this doesn’t apply to just Polkadotters
- Slots for CGPs were given to them through the governance, CGPs also serve as a system chain and extend the functionality of the DOT token itself - it makes perfect sense to let the governance decide about the collators being in the set based on the preferences of the given CGP. Honestly, I am not sure why should be there a need to create a free market that would make collators lock an unreasonable amount of DOT tokens and compete with each other. It also makes implementation more difficult in my point of view.
Based on our experience, we have seen quite a lot of “collator wars” on various chains where some sort of PoS is implemented. If the reward is good enough, it is always going to bring a “mercenary” capital that will run the collators for the yield only and without the required technical experience or participation in governance or discussions about the future of the chain itself.
This brings me to another thought, I think it makes sense to have variable rewards for each respective CGP - the operational costs can vary greatly based on the performance needs. The way I would structure it is to have a proposal for expected rewards where all the collators can present their case and formulate their operational costs and then it will be up to the council to decide the “one-size-fits-all” reward that will be paid to all the collators evenly. Seems fair enough and I would expect collators on any CGP to be involved and take an active part in such a discussion - it shouldn’t be just about “bond whatever they say and forget”