My preferred way to handle this shares some spirit but is a bit different (again, if I were rules emperor :P): The rule would be that first, any pass lift ko bans. Then, any time there are two passes it “stops the game”, but resumptions are allowed, so actually if any player says “hey we should resume”, the game resumes. So two passes only end the game if both players want to end the game. This can happen as many times as necessary.
However, if players enter an endless cycle which spans game-stops and resumptions like this, then when we consider ALL the stop-positions in the cycle and score all of them as final. If the same player wins in all of them, that player is deemed the winner. If however the winning player is different for different stop-positions in the cycle, then the game ends without result.
This rule is a bit uglier but it guarantees that there is no Zugzwang at all. For example it seems to handle in a more “traditional” way pathological cases like this, ending in “no result” with correct play when the result of the game depends on such strange ko, instead of degenerating into a no-pass-go game.