This type of situation is usually handled in local ground rules and by local policies rather than by general baseball rules. Our rule is similar to yours in that we cannot "start an inning" after a certain time limit.
Basically, you cannot in good faith penalize the visiting team because the home team procrastinated. My feeling is that once you make the decision and say you are going to play the seventh, then you have to play it regardless of the behavior of the teams.
BTW - I think there is a sportsmanship issue here that ought to come up during the protest regarding the home team coaches' behavior. This sounds pretty bush league to me.
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