Hello,
I believe everybody wants to see all requests are processed successfully without TIMEOUT, so the best way is to make the back-end respond quickly enough and have plenty of concurrency for satisfying the 750TPS.
If the back-end is unchangeable, I think the second best would be to limit the number of incoming requests to the API Gateway (750TPS won't be satisfied though).
Probably the read time out should be decided from the longest response time of the back-end (the latency of the back-end API).
If the read time out is shorter than the longest response time, the API Gateway gives up to receive the response from the back-end even though it is being prepared.
If the read time out is too much longer than the longest response time, the API Gateway will be wasting time even if the back-end will never respond.
I hope this answers your question.
Best regards,
Seiji