Not quite. They would still have to prove intent to defraud. And that requires a published
definition of fraudulent use (at the very least by comparing with a leaflet that describes
non-fraudulent use), which seems to be absent.

I seem to remember reading somewhere that Oyster pay as you go
has a 2 hour time limit for each journey in order to prevent misuse.

That would be a sensible rule in most circumstances (you'd need to waive it in the aftermath of
serious disruption), but needs a mention in a leaflet somewhere, along the lines of "Every
journey
must be completed within 2 hours".

No chance of that. The current 20-page "Your guide to Oyster" contains
55 images and little more than captions for a 'guide'. A clear attempt has
been made to hide any complexity resulting in a guide that is useless. Why
are they so scared to produce a document that explains the system in a
clear and thorough way. I wonder if those responsible for the documentation
fully understand how it works?

It's fairly simple: If they have a rule but don't publish it, there is no enforceable rule.

(In this instance, we don't even know if there's even such a rule lurking anywhere).

I've just searched the Conditions of Carriage and the only reference to two hours
was for tube carnet so I've probably mis-remembered that.

However, there must be a time limit for Oyster journeys as this would be the point
at which the journey is declared "unresolved" if you do not touch-out.

Also unpublished is the time you have to make an out-of-station interchange.