I agree, it's a stupid "fix" to a small problem that impacts more players than were causing the problem in the first place! And no, it's not working correctly. I've removed items that had been sitting on my vendor for several weeks to lower their prices, and I've been charged that vendor penalty, although that was not what was supposed to happen. And it seems to happen randomly. Some items I'm charged for, and some I'm not, even though they've been sitting on the vendor the same amount of time.
Why punish all vendors for something only a few were doing? Of all the real problems in UO, why did they take the time to "fix" this one?