OK, I'm a bit confused by the overall premise of this thread. How does notoriety only decaying during play encourage AFKing? Are the only things you do ones that raise notoriety? Can't you just go to an Anarchy system and murder criminals without raising notoriety? I'd say rather than "encouraging AFK" it encourages you think more about your actions and maybe better manage your criminal behavior. Or you know, hang out more in lawless areas since that's more your playstyle.
For me, the main issue is the lack of separation of notoriety between superpowers.
Look at the way the old Frontier: Elite 2 and FFE worked. You go to Federal and Independent systems and run riot, accruing massive fines. You're no longer welcome in their ports either until you pay them off. That's fine, because I hang out in Imperial systems for my run of the mill activities, and take a host of missions from the Empire to take down targets in Federal and Independent systems.
But occasionally I get a misdemeanour, forgot to request clearance when leaving, blocked a landing pad, accidentally docked at Achenar carrying leftover Radioactives from my military fuel. I get a fine, but I can still pay it off and continue life with the Empire, while continuing to shun and play havoc to the Federal and Independent systems.
But in ED, I can't do that. Rack up Notoriety 10 blatting a bunch of security forces in Federal space, go back to Imperial territory, clip the wing of an overly-ambitious NPC flying through the toaster, boom, waiting for Notoriety 10 to wash, just to pay a simple 150cr fine.
I'm not looking to go back to Federal, Independent or Alliance space. I
want to be wanted and notorious in those systems due to focusing around play as a staunch Imperialist. But I can't do that at all, because the consequence of dealing with a minor transgression in Empire space gets lumped in with that activity. It doesn't help that Interstellar bounties are bugged as well, but that's not an always-problem at least.
EDIT: I know there's also the concept of "Well just don't get a fine in the Empire!"... but we all know that stuff just goes wrong time to time.