To confirm, you can only put individual transactions on hold, not entire vendors right? If you want to temporarily prevent any new transactions on a vendor, your only option is to inactivate, correct?

What about credit terms?

Credit Limit can prompt a warning message on record save but doesn't enforce a hold. Beyond that, you'd need to create customization via WF/script

I believe there is a payment hold check box on the vendor record that when checked will default all transactions for that vendor to payment hold = T

Maybe that's custom in your environment? I went to the standard form and don't see anything like that.