Naturally, this flag should be auto-removed when an update happens, should inform the author once it's been placed on their series, and should allow the author to keep it in place if they're simply posting an update letting people know that yes, this really is on hiatus and not actually dropped. It would also be nice if it upgraded from a "hiatus" flag to a "dropped" flag after three months with no updates from the author.
Even better would be if we could also get an option in Advanced Search to ignore any non-completed series that hasn't updated since X date or within the past Y days. This by itself isn't good enough since it doesn't protect people from series that they were linked to, or that wind up trending for some reason even after the author abandons them, but it would still be very helpful.
The active-only list includes only fictions that have been updated in the past 35 days, and the complete list only includes completed fictions.
Furthermore, there's an option in the Advanced Search to search between Ongoing, Completed, or Hiatus.