Here's my proposal for overall prospect status:
1) Once you draft a prospect, they will head go down to your prospect pool, where they will stay until you bring them up to your roster or until they play 100 games in the NHL. If you do not bring up a prospect after they have played 100 games in the NHL, they are considered free agents and any team can pick them up in the Free Agency Pool come July 1st.
2) Prospects must play a minimum of 20 NHL games over 3 seasons post-draft. If this requirement is reached, the prospect must play at least 10 NHL games in each of the following seasons to maintain prospect status.
If the prospect fails to play in 20 NHL games in three seasons' time post-draft OR fails to play 10 NHL games following the 3 season deadline, they will automatically be released into the Free Agency Pool come July 1st.
3) GMs can select up to 3 additional keeper prospects that do not otherwise qualify under the first or second rule.
This weeds out prospects that GMs don't care to manage properly (aka they're most likely busts but the GM just hasn't bothered to release them into free agency) as time will take its toll.
It also allows for long-term development.
And it allows for long-shot prospects to be given a chance if the GM decides it is worth the risk.
Age is not a factor here.
Maybe I'm missing something as I am not posting from home. Maybe it's a terrible suggestion. I tried.