Receive session_key from PlexPy when paused. Use session_id to create sub-script to wait for X time then check if transcoding still paused. If so, kill.

create_wait_kill_trans.py

'''
kill_transcode function from https://gist.github.com/Hellowlol/ee47b6534410b1880e19
PlexPy > Settings > Notification Agents > Scripts > Bell icon:
        [X] Notify on pause

PlexPy > Settings > Notification Agents > Scripts > Gear icon:
        Playback Pause: create_wait_kill_trans.py

PlexPy > Settings > Notifications > Script > Script Arguments:
        {session_key}


create_wait_kill_trans.py creates a new file with the session_id (sub_script) as it's name.
PlexPy will timeout create_wait_kill_trans.py after 30 seconds (default) but sub_script.py will continue.
sub_script will check if the transcoding and stream's session_id is still pause or if playing as restarted.
If playback is restarted then sub_script will stop and delete itself.
If stream remains paused then it will be killed and sub_script will stop and delete itself.

Set TIMEOUT to max time before killing stream
Set INTERVAL to how often you want to check the stream status
'''

import os
import platform
import subprocess
import sys
from uuid import getnode
import unicodedata

import requests

## EDIT THESE SETTINGS ##

PLEX_HOST = ''
PLEX_PORT = 32400
PLEX_SSL = ''  # s or ''
PLEX_TOKEN = 'xxx'

TIMEOUT = 30
INTERVAL = 10

REASON = 'Because....'
ignore_lst = ('test')


def fetch(path, t='GET'):
    url = 'http%s://%s:%s/' % (PLEX_SSL, PLEX_HOST, PLEX_PORT)

    headers = {'X-Plex-Token': PLEX_TOKEN,
               'Accept': 'application/json',
               'X-Plex-Provides': 'controller',
               'X-Plex-Platform': platform.uname()[0],
               'X-Plex-Platform-Version': platform.uname()[2],
               'X-Plex-Product': 'Plexpy script',
               'X-Plex-Version': '0.9.5',
               'X-Plex-Device': platform.platform(),
               'X-Plex-Client-Identifier': str(hex(getnode()))
               }

    try:
        if t == 'GET':
            r = requests.get(url + path, headers=headers, verify=False)
        elif t == 'POST':
            r = requests.post(url + path, headers=headers, verify=False)
        elif t == 'DELETE':
            r = requests.delete(url + path, headers=headers, verify=False)

        if r and len(r.content):  # incase it dont return anything
            return r.json()
        else:
            return r.content

    except Exception as e:
        print e


def kill_stream(sessionId, message, xtime, ntime, user, title, sessionKey):
    headers = {'X-Plex-Token': PLEX_TOKEN}
    params = {'sessionId': sessionId,
              'reason': message}

    response = fetch('status/sessions')

    if response['MediaContainer']['Video']:
        for a in response['MediaContainer']['Video']:
            if a['sessionKey'] == sessionKey:
                if xtime == ntime and a['Player']['state'] == 'paused' and a['Media']['Part']['decision'] == 'transcode':
                    sys.stdout.write("Killing {user}'s paused stream of {title}".format(user=user, title=title))
                    requests.get('http://{}:{}/status/sessions/terminate'.format(PLEX_HOST, PLEX_PORT),
                             headers=headers, params=params)
                    return ntime
                elif a['Player']['state'] in ('playing', 'buffering'):
                    sys.stdout.write("{user}'s stream of {title} is now {state}".
                                     format(user=user, title=title, state=a['Player']['state']))
                    return None
                else:
                    return xtime
    else:
        return None



def find_sessionID(response):

    sessions = []
    for s in response['MediaContainer']['Video']:
        if s['sessionKey'] == sys.argv[1] and s['Player']['state'] == 'paused' \
                and s['Media']['Part']['decision'] == 'transcode':
            sess_id = s['Session']['id']
            user = s['User']['title']
            sess_key = sys.argv[1]
            title = (s['grandparentTitle'] + ' - ' if s['type'] == 'episode' else '') + s['title']
            title = unicodedata.normalize('NFKD', title).encode('ascii','ignore')
            sessions.append((sess_id, user, title, sess_key))
        else:
            pass

    for session in sessions:
        if session[1] not in ignore_lst:
            return session
        else:
            print("{}'s stream of {} is ignored.".format(session[1], session[2]))
            return None


if __name__ == '__main__':

    startupinfo = None
    if os.name == 'nt':
        startupinfo = subprocess.STARTUPINFO()
        startupinfo.dwFlags |= subprocess.STARTF_USESHOWWINDOW

    response = fetch('status/sessions')

    try:
        if find_sessionID(response):
            stream_info = find_sessionID(response)
            file_name = "{}.py".format(stream_info[0])
            file = "from time import sleep\n" \
                   "import sys, os\n" \
                   "from {script} import kill_stream \n" \
                   "message = '{REASON}'\n" \
                   "sessionID =  os.path.basename(sys.argv[0])[:-3]\n" \
                   "x = 0\n" \
                   "n = {ntime}\n" \
                   "try:\n" \
                   "    while x < n and x is not None:\n" \
                   "        sleep({xtime})\n" \
                   "        x += kill_stream(sessionID, message, {xtime}, n, '{user}', '{title}', '{sess_key}')\n" \
                   "    kill_stream(sessionID, message, {ntime}, n, '{user}', '{title}', '{sess_key}')\n" \
                   "    os.remove(sys.argv[0])\n" \
                   "except TypeError as e:\n" \
                   "    os.remove(sys.argv[0])".format(script=os.path.basename(__file__)[:-3],
                                                       ntime=TIMEOUT, xtime=INTERVAL, REASON=REASON,
                                                       user=stream_info[1], title=stream_info[2],
                                                       sess_key=stream_info[3])

            with open(file_name, "w+") as output:
                output.write(file)

            subprocess.Popen([sys.executable, file_name], startupinfo=startupinfo)
            exit(0)

    except TypeError as e:
        print(e)
        pass

@blacktwin Well, it works :-) but an exception for direct streams would be great.. no reason for killing direct streams :-)

@csy7550 If you want, you can try this script. It is kinda the same as this one but set to kill all paused streams and uses PlexPy's Activity to check the stream instead of the xml. Just change line 111 from:
if a.state == 'paused' and xtime == ntime: to if a.state == 'paused' and a.video_decision == 'transcode' and xtime == ntime: to include the check for transcoding. Again, that way you're relying on PlexPy definition instead of my definition based on the xml.