Nope, don't use either of those. I am going to continue to try some things, as it appears there's no definition of this behavior in any iTunes documentation I can find. Right now I do know that a smart playlist without live updating checked still does update if the original songs it in no longer meet the filter criteria. It may be that if you define a smart playlist and filter on things that don't normally change, unlike last played and play count, maybe it never updates on its own.
I assume anyone will see this behavior (on Windows at least). If you create a smart playlist, filter on a couple things including last date played not in the last 1 month, for example, then play the playlist. Unlike one with live updating checked, as you play the playlist it will NOT update as you would expect since live updating is not selected. It also doesn't update if you exit the playlist and then view it again immediately. However, after a certain (unknown) amount of time, you view it again and it will update to songs that haven't been played. In my case I checked the next day and it had updated. Maybe the date change is what does it. I will have to try this again right around midnight and see if that's the trigger. I'll add that during that time I did not restart iTunes or my computer, I do know that simply restarting iTunes is not the trigger (I tried it).
It just seems odd there's no documentation on this behavior. The help page for smart playlists is very basic. This is obviously not really a problem, just a curiosity. I am pretty surprised if I am the first one to wonder about this, however.