It is RIDICULOUS!!!
We have almost 500000 accounts registered but about 200 people on server at the best time of day (now 142 for example).

FIRST of all you should delete those accounts which have last login time older than 1-2 months. You would clean DB in a GREAT way and nobody would get hurt. I can Estimate it for about 200-300k for deletion at least? Many people just logs in, haves a look and never again looks for an account.
You should make for example quarterly accounts revalidation. It can be done easily and it can be done automatically.
SECOND: Backup accounts that are being used lately and delete the rest (trash, dumps, old accounts) that won't impact active, good players.
THIRD: The rest of data should be kept away from Accounts so in case of any damage it can be restored, backuped separately without any negative impacts as well.

I was working on commercial servers in comparison to which this one is Atari XT... and believe me - you have no need to wipe players accounts.
Besides that would be a great experience how to solve critical situations without loosing crucial data.

You need action plan and do it wisely! Let me know if I can help.