I would like to see an enhancement where On Hold projects do 2 things:
1. Like @Pam Thomas suggested - not send notifications when the status is set to On Hold
2. Not calculate project health - when a project is on-hold more - likely than not, no one is going into the project and updating task end dates, so what happens over time is that the project goes to At Risk, then In Trouble.
For Views or Reports that show On Hold projects, it would be better that health is not calculated than to show Yellow or Red as the health as time progresses.
I tried to get around #2 by treating On Hold as Complete, but that set progress to 100% and that's wasn't the right approach either.