To your first point this used to be the case, but there was one major problem. You get back from vacation, you turn off your "on vacation" setting so you can move and suddenly people start taking the time out win as you do not have your vacation flag up anymore!!!
On the second point, far too many people abuse the vacation setting, and think its a don't time me out flag even though I am playing 200 other games and not yours which I am losing.
The vacation flag was a good idea ruined by people either ignoring it or abusing it. It is now irrelevant. I would personally suggest revisiting what it was for, allowing people to have a holiday without losing loads of games.
Maybe everyone having 30 days a year, during this time you can not be timed out. Once your 30 days is up...tough.