How does people think about leaving the Reaction system the way it is now, but allow pausing to happen at any time and you can turn on/off reactions of any of your PCs in the party?
AI can do the same thing, allowed to turn on/off reactions moving into each turn of the PC. Obviously the AI won't pause to turn these on/off, it just happens in the background and you won't notice. Probably, will happen at the beginning/end of every AI action knowing who will be acting next, but that is up to how Larian want's to implement it.
I think this a good compromise to get what people are more looking for out of the Reaction system while not having Larian to completely overhaul the system.
That would require Larian to implement a full game pause, something it doesn't seem like they'll do likely because of multiplayer. There's been a few threads about such a topic.
But also, I wouldn't like it. Nothing should require timing while in turn-based mode. If I leave to go to the bathroom during combat, I shouldn't miss anything except having to watch the enemy/friends take their turns. If I had to choose between the current system and your suggestion, sure yours is strictly better. But it's not sufficient in my opinion.
Reactions should be a 3-toggle system: "pop-up prompt" / "activate automatically" / "off"