anything wrong with offering 1.56% house edge? (higher than 1%, but lower than satoshi dice's 1.9%.) and matching kelly.
No, but why would anyone play your 1.56% edge game when there are reputable 1% edge games available?
Almost nobody plays satoshidice any more, because they don't want to pay double the house edge of the other games. Why put yourself at a disadvantage?
Yeah. If your site is offering a unique gambling style that is not offered by other reputable sites with a lower house edge, you can probably get away with it assuming people really enjoy the site. Or perhaps you are offering other incentives to players such as promotions etc that pay back some of that edge to the players.