Yes, the red ring is inferior because it only quarters damage, while the orange ring cuts it to one eighth. I made it the payout for the L7 gauntlet because, unless you leave the dungeon, you'd play it with the red ring and then have the orange ring for the last two dungeons.
In response to your earlier comment about the bombs, perhaps I'll replace some of the bomb upgrades with Blue Potion special item rooms, so that players who skip the letter still have some chance to stock up before a dungeon. It was my intent that they'd go back to old dungeons with the Lens to find the potions hidden there, but there still might not be enough for struggling players who passed on the lens. Perhaps one of the secrets will feature a VERY expensive blue potion (250 rupees) to get players by until they get the L9 boss key.