You are in a great situation, and whatever choice you make isn’t going to put you in any kind of financial danger. Personally I would never give up a fixed 2.652% loan, but if you are going to do it, then your approach of creating a ‘home sinking fund’ is a good way of doing it. There’s no added safety in pre-paying the mortgage until the note is completely gone, and you won’t save much in interest with a rate that low (you’ll most likely lose out to opportunity cost if you over-paid each month).
I always advocate taking an objective, rational approach to money, so I would speond some time reflecting on why having a paid off home would give you ‘psychological relief’. Your expenses will be lower, but you will have less in savings. It may ‘feel’ like you own your home free-and-clear, but you still have taxes and insurance. Fail to pay those and you risk eviction, just as you would not paying your mortgage. None of those are likely to happen as you have more than sufficient savings to cover any SHTF scenario. So why is having no mortgage so appealing?
FWIW my parents created a home sinking fund with a plan much like your own, but once they reached the milestone of having a larger balance in the sinking fund they decided they preferred the safety of this six-figured account rather than the lower expenses on a mortgage taken out decades ago (and who’s monthly PI payments now seemed minuscule thanks to inflation and wage growth).
Regardless of what you do, congrats on being in a position of financial strength.