This is by far... the best mechanic I have ever seen on this topic. It includes most of the parts people love the most (timed lockouts, long-term commitment to achieve, etc). The coding would *hopefully* be very simple. Add a stat to your character, forms reference that stat. Third switch posts a "Your Fired!!!" over your head and you are neutral. Further attempts at changing side result in "Nuh uh, not again".
First form to pick a side counts as 1. SL enabled characters get the extra grind of adjusting faction to be able to swap. Maybe you can add a nice grinder quest to bypass your side count, so if you went Neutral > Omni > Clan > (Third strike, you are neutral)... you can appease one of the sides (thinking a Bazzit style quest) and get a special side form for that. Since your already maxed, the lootable side forms wont work ("Nuh uh, not again"), you'll be stuck on your chosen non-neutral side, as the quest mob for the other side wont talk to you for being non-neutral.