I have lost instances due to the time limit. Temple of Qarn and Stone Vigil to name a couple. The time limit is not as generous as you are making out. And there is certainly not enough time given to replace members who had to go or deal with real life situations that might occur.
Also I should point out the time limit is so restrictive that it makes attempting to join a party in progress almost pointless, because nearly every time I have joined one it was a failure because of a lack of time. So not only is it punishing for people learning an instance or needing to deal with real-life emergencies, but it renders that game option completely worthless. So it doesn't even sync with the game design.