I agree that a 2-hour flat may hurt the small and indie devs (and we're not talking just 'garage games' or experiments, but also big names like TellTale or Red Thread), since you can make complete playthroughs of some games in that time.
However, allowing indie devs to lower that time is going to bring more problems, because: 1. on what authority do you allow, say, Tale of Tales to allow one hour of 'free' game but not EA or Cyan? money invested in the game? average playtime? whether the company is in the stock market or not?; and 2. if a refund is for a legitimate software problem, it might take the whole of the 2 hours to fix it, regardless of game length. It's not a Steam game but, to use it as an example, it took me a week of fiddling with drivers and settings to get Dragon Age Inquisition to play properly on my system.
Steam also says that, if an user is found guilty of abusing the refund system, they will block their ability to ask for further refunds. Unfortunately, what constitute 'abuse' hasn't really been specified.
In general and for all media, however, I found that those willing to give money to a creator/content will find ways to do it, and those who do not want to will find ways to get around without paying. IMHO, giving more rights to honest customers who buy through official channels is worth the price (heh) of the small amount of sales that will be lost to refunds.
Atrus aka Nahvah aka Ian Pertwee aka too many darn names