I get you, but I've noticed that as a player, a lot of people will sit in an area with other people...and wait. They aren't always afk. In fact, rarely are they. They're waiting for someone to RP with them rather than being proactive and being the one to initiate. They're probably nervous, or anxious, unsure of how to be the one to start a conversation, or would just rather be interacted with rather than be the one to interact. This happens a lot and is very hard to not see.
The colored name solves this issue. A player with the LFRP color is, in effect, telling people to come to them. The colored name is both in the game world and on the player list, so it takes a short look at the player list to find someone to RP with as well. I still think it is a very good idea. I understand the hesitation to adding more possible name colors, though. We don't want the server looking like a COD4 game.
With the other two things, one of them solves the other.
Sometimes people turn on LFRP mode, and keep it on, because they forgot they turned it on. This would be much more likely if it were to persist through resets.
But if you are more often notified of people entering LFRP mode (Either through the regular method of people entering/leaving it, or the proposed method of people who log on with LFRP mode active tell others 'X player is looking for RP') you will quickly become aware of your status and turn off the mode if you do not wish it to be on.
I believe those who are looking to hide their location already will not be using LFRP mode and I'm fairly certain they weren't going to use it already.
And ultimately, LFRP is an opt-in system. You are freely able to turn on and off the system at your leisure. Any spam is ultimately your decision to endure and it keeps itself in the combat log so it doesn't interrupt any roleplay. For those who are unsure, we have tells so we can ask "Hey, are you up to RP? It says you're in LFRP."
To conclude, I have too much faith in the player and believe they can use the provided systems to enhance their experience. With improved tools (my idea for LFRP improvements, anyway) and old methods (asking if someone wants to RP via tells) I think this could benefit more players and bring enjoyment to more people.