Reflex/deflex is measured from the pivot point of the limb butts, not the limb bolts. It'll be somewhere between the limb bolts and the edge of the riser.

As far as your other questions, if there's a point of diminishing returns with deflex, as far as accuracy and forgiveness are concerned, I really don't know.

At 2" deflex, the Hoyt ProVantage/Superslam series bows are the most heavily deflexed bows I've ever shot and they were something! Even though those risers had a reputation for breaking, they're still my favorite compounds of all time. I won MANY tournaments with those bows, field archery and 3D. I even won a 3D shoot a couple years back with my Superslam Legacy, even though it only lobs a 2315 out there around 220 fps. (Getting whupped by an old fart with a 10 year old Hoyt really torqued off those Mathews shooters with their brand new Q2's.)

Now I shoot a ProTec with 1" deflex and, truthfully, I don't shoot it quite as well. The grips are very different though. The PV/SS have high wrist, hand filling grips that fit me like a glove - there is one way and ONLY one way I can grab their grips - while the ProTec grip is just two thin wooden plates screwed onto the sides of the skinny handle. It rattles around in my hand like a bean in a tin can. So, it's really hard to say for sure whether it's the less deflex or the undersize grip is what keeps me from shooting it as well.

Going back even further, past the Superslams, past the ProVantages, to my old Hoyt ProHunter, it had a straight riser. No reflex or deflex. I shot it very well, but I definitely shot the ProVantage better.

So, just based on my experiences, I'd say I would want at least 1" but not more than 2" of deflex if I was designing a riser for myself.