I think what you're missing here is that upkeep (the numerator in your equation) is largely constant. It can change a little bit, but it can't go anywhere near zero. This is why it can be ignored.
As I said above, the bulk of calories consumed in a day for a typical person are upkeep, not exercise related. You do not need to factor it into the overall equation. The changes are not significant enough.
"Starvation mode" theory is that the upkeep of the body changes significantly when calories are lower, preventing the body from losing weight. It's just not true. There are secondary effects (lethargy, no energy for increased exercise for athletes) but the vast majority of obese people do not exercise significantly to begin with so these effects can likewise be ignored. The baseline caloric upkeep -- which is something like 70+% of calorie burn for almost all fat people -- will never significantly change in terms of its efficiency. This is why you will always lose weight on a calorie restricted diet, even without exercise.
Hopefully this clears things up for you.