Impact on the application on reducing IOPS limit

What does CloudWatch Metrics say about the IOPS that you're consuming? Ref: https://docs.aws.amazon.com/AWSEC2/latest/UserGuide/using_cloudwatch_ebs.html

Based on that you might be able to make a decision. If you're still not sure, setting up a test system for short time and stress-testing it is what I'd normally recommend.

I agree, enabling CloudWatch detailed monitoring of the EC2 and observation of the data points collected in the log streams for disk, network, cpu and install the agent for memory metrics.

You mentioned the application. Further analysis can be performed through AWS getting superior insights by generating real-world failure conditions, such as impaired performance of different resources. AWS Fault Injection Simulations for EC2 and RDS fully managed service running fault injection experiments to improve an application’s performance, observability, and resiliency. FIS simplifies the process of setting up and running controlled fault injection experiments across a range of AWS services, so teams can build confidence in their application behavior.