I would not be concerned about seat stay flexing. You should be clearly in the elastic part of the stress-strain curve.
My concern is the weld between the SS and dropout. Bend tests can’t show fatigue. That area is the perfect storm: highest stress concentration, weakened steel (heat affected zone), and stress riser.
This is why early steel disc forks cracked at the tip of the brake tab:
The fork undergoes much less flex an full suspension rear end would.