The first thing you seem to not consider is the percentage. When someone does exceptional service you give them an exceptional tip. I do 20% of the total (so including tax) as baseline. Yes I "overtip" but I decided a long time ago that being generous with service staff was something I want to do. If someone went above and beyond I would add a few dollars/extra percent to the tip.
The question about 7 and 700 dollar bills is illustrative. If I am buying a hotdog or I am buying an exceptionally high end meal - implies a big difference the sophisticated of service and the experience of staff. At the higher price point I expect the waiter to be capable of (whether I need it or not) help the diners navigate the menu and the wine list for example.
That's mainly what I was getting at. By the time you are a waiter in a high end restaurant you are financially good and better than any alternative.