Because this is framed as an an either-or, you would still be bitten by inflation by leaving the parcel of money in T-bills at 2.95% instead of paying off debt. In this framing, the debt no longer acts as an inflation hedge over the life of the T-bill (which is pretty short...). Since you would presumably be repurchasing T-bills incrementally to maintain that allocation, you would still be lose against the hypothetical higher inflation rate at each T-bill transaction cycle. Granted, you would *somewhat* keep up with inflation, but... Also, because the real estate is a leveraged asset, there is risk there as well.
Given that it is a break-even now (or pretty close), I would pay off the mortgage as a means of simplifying. Depending on your target allocation, you could then convert what you were paying to the mortgage into purchases of T-bills (which are unlikely to have a rate decrease in the near future).