Certainly on your first point, I can confirm it WASN'T just iWorks Documents that were deleted in my instance. I not only lost all my Pages & Numbers documents, but also all the data that was stored for Soundhound, Jaws, DoodleJump, AwesomeIdea and TinyEditor. Everything was deleted. I found it all in the Mobile Documents.deleted folder, but it's pretty useless as I can't get it back into the apps from there.
I'm not sure backing up to Time Machine will help. It only helps with data on your Mac, documents you create on your iPad are stored in iCloud, not on the iPad, and therefore not copied to your Mac. The other issue is if you DO save it on Time Machine, how the heck do you restore it to your iDevice? There's no way of restoring a single application's data.
There IS a confirmation, when you sign out of iCloud, that your data will be deleted. The problem is it's being deleted off iCloud completely. If you have multiple devices for your iCloud account (i.e. my iMac, iPhone & iPad) you don't want the data deleted off iCloud if you are simply removing your iCloud account from your iPhone. It needs to stay in iCloud so it's still accessible from my iPad & iMac.