Stop levelling your 5* now. Your best covered 5* is SS and he isn’t worth dumping ISO into. It will cause you problems later, if it hasn’t already. Keep champing your 3*. Cage, Fist, DP and CMags are all very good and worth champing and you are only a couple of covers away at most for each of them.
It seems like you are mostly on the right track, I would just focus on your 2* recycling and champing as many 3* as you can right now.
Given that you have some 3* champs already I would lean towards keeping SS if at all possible. 300 is not that high and people have recovered from worse mistakes.
With that said, are you having issues reaching the goals you want to reach in PvE or PvP? If so you may want to think about it but you are pretty close to some significant improvements in your roster with 3* champions so things will be getting even better soon.
Keep your 5*, just don’t put any Iso into them until you have a few established 4*. With a dozen champed 3* the impact to your scaling should be minimal.