Correct. We do not automatically put the status back to "In Progress". The author can choose to do this, but if they are posting slow enough to trigger the change to begin with, it's probably false advertising to switch it back to "In Progress".
No. It's not worth it for the software time investment. If you are not posting fast enough not to get automatically tagged, then you're not likely to post a new chapter fast enough to avoid getting changed again. Comsie posts a chapter about once per year per story, maybe. For example.
"In progress" implies regular posting. Weekly, biweekly, monthly? Any more than that and you're not really posting regularly. And there are plenty of people that are militant about not reading a story until it's complete. They might start reading a story that is posting regularly.