Personally, I agree with the OP for the most part. Such a short time limit is ridiculous. However, something needs to be in place to prevent instance holding. Perhaps if nothing dies in an instance for 60 minutes then the party has 5 minutes to continue or get booted. Just a thought.

I have no problem with speed runs, but a time limit is not the way to encourage it. The extra rewards at the end is the proper way to encourage a speed run, or any run done in an outstanding way. You know what they say about the carrot vs the stick. Reward the phenomenal, don't punish the normal.