A good example of the 12 hour limit hurting play, I was flying with a squadie and a couple of friends as Rook. Another friend logged on and was a knight, as is the rest of his squad. He only had time for a few flights. As there weren't any of his squad on at the time he "could" have switched to fly with us, as we could he switched to fly with him. The problem is later that night we all were looking forward to flying with squadmates. With the 12 hour rule none of us could switch. It's a rotten decision you have to make due to the rule.
I think if the rule was set to 3 hours it wouldn't make those decisions that hard any more, nor would the people switching add to "wild fluctuations" in the population per side.