Can the Overwolf OBS engine be scripted in such a way that the temporary 1-minute clips that already get auto-deleted are captured in the lowest possible quality to save resources?

This wouldn't even need a change in Outplay's interface, if the OBS capture control scripts can use game event data to dynamically adjust bitrate between cuts in the current session. Users that capture games per match or highlights wouldn't need to essentially record a full session in the same high quality, only the actual video captures would be, while the temp-capture 1-minute trash would be thousands of times smaller in filesize since they are erased soon regardless.

(This would of course not apply to the Screen Recorder or Full Session captures, but only to games with current live events active). And if the engine detects an event such as Match_Start it can just cut the recording to 10/kbps there and then bam it's back to 12000/kbps (or whatever the user has it set to)