rabbitoid: I think it was essentially the same with the old vacation system, the difference being that the BKR decline happened over the course of a day, not an hour.

In my view, the main problem is that if such a player decides to come back and play more games, his next many opponents will be punished BKR-wise for playing a strong opponent who now has a 700-ish rating.

Maybe it would be possible to suspend a player's BKR if he times out in a certain number of games? His opponents who win on time would all be rated according to the player's BKR at the time of the suspension. The player himself would have to start over and play 25 games to establish a new rating. And, perhaps most important: The player should automatically be deleted from all tournaments he has signed up for, to limit the number of time-outs.