So glad to have found this thread, did not realize the patches were coming so rapidly. +1 for Faction rep changes!
Why remove rep decay? This seems like a good way to forgive/encourage experimentation by the player. Unless you read the forums religiously, you won't know all the rules about factions and relationships; neither do I think that the game should explicitly tell you all these things. Leaving it opaque is fine, but the decay is a mechanic to make sure it isn't too punishing.
I don't think it was actually doing that, though. So in my view it's more cleanup of stuff that's in there but, if we're being honest, that I've completely forgotten even existed. Not opposed to possibly bringing this back in some other form eventually, though.
Idea for 'repairing' bad rep: You go to the faction, open comm links, find an official, and 'offer your services'. You get a special smuggling, trading, or bounty event ('mission') which pays less based on how bad your rep is (0 if hostile). Upon success your rep with that individual gets a big +, and you can get more missions from them. When it's high enough they start 'lobbying' or putting in a good word for you. 'Your reputation with X faction has improved by Y due to your work with (Quartermaster Ericcson or w/e)'.
Consider also the ability to offer money, goods, a ship, an officer, etc. but they might turn those down and offering services seems like it should be the most reliable (if time intensive) way to build rep with individuals. If your rep with an individual is high enough, perhaps you could ask them 'how can I serve the hegemony / make amends / clear my record' and they offer you a really tough or unprofitable mission which has big impact with faction. They might ask you to do something which hurts your rep with a hostile faction. If you had to sneak into port to talk to them it has a nice little spy feel to it.
sidenote on the gryphon's ability: instead of only 1 use, you could give it a sizable cooldown that is multiplied by how many missiles it replaced. So first use is 'free' but if it replaced all the missiles, a very long cooldown. This might even make it easier on the AI as an 'early' use wouldn't get as much cooldown.