I think if your larp needs a safe word, it should be one that isn’t likely to come up otherwise. Like “play station”. 
I once ran a larp with a PS3 in it… 
The nice thing about “time out” is it sounds like a pause in the game, even to people who have never been briefed on that phrase. “Out of character” is similar that way. They’re intuitive, they need no explanation, and they make their way into games even if they’re not part of the brief so it’s easier to just embrace them and make them official.
That’s true, but I also really like the idea of having one signal for “this is fine, but don’t go any further” and another for “too much, stop that now!” It may not be strictly necessary, but it does sound useful and could be worth a try.
Indeed; also, some of us just aren’t all that great at reading people. Not to slander anyone else, either; I’m talking about myself 
It’s not for lack of trying, just an occasional lapse in comprehension - which is why I’m all for rule-enforced clarity.
If we’re aiming for clarity, then I prefer crystal clarity. I am likely to react much faster to “Anna, please let me go” than “RED!” (because I’ll spend at least ten seconds trying to figure out why the heck you’re shouting colours at me) I think that’s the key way to know the difference between an IC and OOC brush off:
“Sir Lancelot, I protest, you must unhand me!” is obviously IC
"Bob, please let go of me" is obviously OOC, especially if your name is Bob.
Hearing your real name in a roleplaying context is much more likely to jolt your awareness than an abstract term. We get away with “Time Out” because it’s the only call we vigorously train people into. It’s accompanied by the action of kneeling down and taking up the cry to set an obvious example of what to do, even if you’re brand new.
That suddenly made me remember that moment in Wolfgang when the crew guy grabbed me and I used magic on him, but he didn’t remember what that call meant and didn’t react at all, so I spent a while explaining the situation and why he has to let me go, so when he got it he immediately released me, but the time was lost and there was no point for me to run anywhere already.
So if you are talking about one specific larp for which the rules like that are being set, chances may be people will be as easily forgetting the colours as they do with ckills and advantages, while T-hands and Time Out are universal across all larps here. I get unhappy when in some larp I see GMs putting different calls to do the same thing, because I will certainly forget! But that’s IMHO, of course
Maybe everyone else just has better memory than me.
What was that discussion about changing Finishing Blow to Coup de Gras in some larp? There were funny implications this may end up in big confusion and someone who is finished off by a crew person would not figure it out and come back to players saying “that guy over there has just given me Cup of Grace”?