Your original post has several things that are not correct. I'll address the most important one first:
Active Hours only applies to [INSTALLED], which is only 20 minutes or so.
Active Hours can last for up to 18 contiguous hours. My Active Hours are set to start at 7 AM and end at 1 AM the next morning.
[INSTALLED] takes several HOURS
Except for new versions of Windows, like Windows 11 24H2, installing updates needs just a few minutes. What can take a long time is that Windows waits for you to stop actively using computer. That's not the only thing Windows keeps 'on hold' until you are not actively using the computer, so as to make the most of your computer's resources available for you. It also performs virus scans, indexing, disk cleanup, disk optimizing, and backups, among other activities.
Is switching to inconvenient Manual Update the only way I can get Windows to avoid (A) and (B) during Active Hours?
There's no supported method for doing manual updates. Many have published their ideas on how to do this, but performing unsupported maneuvers on an operating system is like a trapeze artist working without a net.
Both [DOWNLOADED] and [INSTALLED] happen in the background, when you are not actively using your computer.
At first I thought you had something different in mind:
Even during your Active Hours, when your computer is not supposed to be restarted to finish installing an update, if Windows 'senses' that you may not be actively using your computer - maybe it thinks you're taking a lunch break - it will pop up a notification asking for a restart. If you're at your computer to see the notification, you can tell Windows "not now" and even pick a better time. Otherwise, Windows will eventually restart your computer. While I'm not crazy about this myself, I understand why they do it this way.