I was confused on if this were a lowering of the 0.01 ppc fee per kb, and/or allowing tx fees below 0.01
Part of the confusion is that both values are represented by the same constant in the peercoin source code: MIN_TX_FEE
src/main.cpp:int64 nTransactionFee = MIN_TX_FEE;
this is where the tx fee is rounded up to 0.01
src/rpcblockchain.cpp: nTransactionFee = (nTransactionFee / CENT) * CENT; // round to cent
this sets the tx fee per 1000 bytes x 0.01
src/wallet.cpp: int64 nPayFee = nTransactionFee * (1 + (int64)nBytes / 1000);
It would seem to keep the 0.01 fee per kb and also allow lower tx fees than 0.01, there needs to be a new constant (TX_FEE_PER_KB or TX_FEE_PER_K) at 0.01, then set MIN_TX_FEE = 0.001 or 0.0001.