I'm not sure if there is a reset time for this code as there is for some of the other codes. I'm pretty sure it's fairly immediate once the ECM begins to advance the timing based on all of the other parameters. It will fail the sensor according to the FSM extract at or above 2000 rpm. I can vouch for that. I sure wish I could get a hold of the proprietary info on the logic in the ECM!!! That would be so golden. I love that stuff.
From my own experience, when mine went out, I would reset the code and no sooner put the reader down and the light came right back on. I think it would be safe to say it's immediate.
The 4000 rpm number you saw is for doing the wave form test to ensure it was at 0.141 msec. The frequency is so incredibly narrow on these sensors it's amazing.
EDIT: Keep in mind the ECM and the engineers behind it are pretty dang smart and will not retard your timing to a point where it will damage your engine! It retards it in SAFE mode. Definitely take this off the back burner and move it to the front burner but don't run around in panic mode.