Thank you for opening this issue on the table.
For borrow caps, (if I remember correctly) it is managed by community multi-sig. (no governance voting) but not sure it is possible to set it for legacy cETH.
Borrowing cap history (Jun, 2021)
For changing interest model proposal, I agree that it could reduce borrowing demands a little bit but won’t much helpful as long as expected profit is greater than its borrowing cost. So, I only agree that set borrow caps for ETH option without modifying interest model itself. and another reason is that it has no guarantee for its merge schedule. It can be canceled/delayed with various reasons. Then should we change its interest model again depending on merge schedule?
and if it is not possible to avoid 100% utilization situation, I was wondering how to support Compound users who want to withdraw ETH under 100% utilization. The usage of reserve(for ETH) is not clearly described in the document but this would be one of solution to support them.