I think I came up with a good compromise for the time being. I set it up like this:
It will check if you are in the middle of a sentence, and only then will it start the inactivity timer. The inactivity timer is set to 2000ms. So if you are writing a sentence normally, there is no reason for the inactivity timer to be running. And it will process only once you finish the sentence. (I also added a new processing mode option that I was talking about that lets it process after space or comma). But if you are located mid sentence, it assumes you are modifying something and will run the inactivity timer every 2 seconds since last keyup.
This should be a good balance.
As long as I didn't break anything during this update, I'll look into the hybrid mode I was talking about.