I agree with everything you have written here, and that doesn't always happen, so good job my man, lol.
We definitely need a base level AMM liquidity pool instead of bonds. I get the idea of a time lock, but it would HAVE to be an option. Say something like a higher APY or something for staking longer, but certainly have an option to get out immediately. I get the 'security' aspect of it, but I was also locked into 14 day pools with LUNA/UST, ATOM/UST, and OSMO/UST earning some crazy yield when that ponzi bubble popped and I lost over six figures, so I would say it's more of a PTSD thing for me, lol.
Hell, I am one that really doesn't care for the 13 week power down model of Hive. I would like to see an option for a 4 week or 1 week power down with a fee or something. But I know, I am going down a whole other rabbit hole there.
The timelock on LP tokens is just for security purposes.
In case the account gets stolen so you have time to recover it.
Like you said it would be optional so a timelock somewhere between 0 and 1M blocks (0-35 day lock)