The two points you are mentioning were strong suggestions from the Olympus community. The upper limit of $5m was also a requirement from Olympus. The proposal here has been designed to find the most suitable partnership in order to seal a long term alignement of interests between the two protocols, and to ensure a successful launch.
The risk free loan is not costing anything to Olympus, and the position will be unwinded through taking part in bonds as suggested by Tex in the governance discussion, which corresponds to a favourable token swap for Olympus. It will also help generating revenues and excess reserves for OHM with the OHM held in treasury. USD 5m is a rather small amount compared to the >900k OHM held by the treasury, but if the Olympus community feels it is too large, we can definitely consider reducing this. Finally,
Regarding the 1.1% fee, it's not so low actually (no design, management or maintenance needed from Olympus), and it is not risky at all for Olympus as it is free (no OHM minted against this fee, pure revenue to the excess reserves). The LOBI token will give access to governance rights on CRV, FXS and many others in the future, so in terms of governance power, it will be interesting for Olympus DAO to hold this token and participate in governance. You also need to look at the full picture here. Lobis will accumulate OHM through liquidity bondings, creating a new use case for OHM and having a positive impact on sOHM's APY. Lobis will accumulate way more OHM than any protocol offering OHM reserve bonds as we have seen with the Olympus example that LP tokens accumulated through liquidity bonds accounts for the vast majority of reserves. It also shows the world that pairing with OHM works.
Finally, it sounds from your questions that you are very bearish on accumulating CRV, FXS, or any governance tokens. Of course this is a partnership, and the first question one should ask themselves when considering this proposal is indeed: "does it make sense to create a governance focused vertical". Once this question is solved, the other questions around the risk of launching a new token, or the appetite to accumulate underlying tokens rather than LOBI tokens become irrelevant.
We hope this answers your concerns!