I'm glad you posted your question, because both features are implemented in the software, but can be tricky to configure.
To configure the delay time for hiding and unhiding, click on your LaunchBar node, and go to the Docking Bar 2 tab:
Right above that you will see a checkbox for "Do not stretch to full size". Check that box and then you can make your LaunchBar not stretch the full width of your screen.
The tricky part then is to actually resize your bar. To do that on more recent versions of windows, you MAY NOT (try it first) be able to drag the edges of your bar. In this case, click somewhere on the back of the bar, and then use Ctrl+Arrow keys or Alt+Arrow keys to move and resize your bar.
Let me know if that works for you!