Matt I'm not sure we are talking about the same screw in hatch. Mine is a 5" Viking Hatch and if it had an "O" ring it doesn't have one now.
If the scew lid has a swivel & a leash it would be captive. Use a good handle to allow it to scew or uncsrew w/ 1 hand.
Truth be known I have never had any issues on any of my Hobie hatchs. Not on the original Sports with the non-captive hatchs, nor the old Outback and not even on the Islands.
Ya, the T&S seal twists but like you say it still is water tight (mostly anyway). My wife's Island can see multiple outings and gets no water. Mine only gets a little water - ~1 cup (after fixing several hull issues), and I'm not even sure thats from the T&S hatchs. I just don't bother cleaning or fussing with the T&S "O" ring. Spoiled by the older style hatches I guess. I do have to keep re-gluing the large neopreme gasket on the front hatch -but that is no big deal.
Lets put it this way. I would never spend the money to purchase a replacement hatch for the T&S on my Islands. They work well enough for me.
However, brainstorming is good and Hobie equipment always seems to evolve over the years.