Maybe it's a bit like the time cracks... They erased Amy's parents from history but Amy is still here even though that should be impossible.
Also time crack erased people CAN be remembered. Amy subconciously remembered Rory and could actively be reminded of him.
Time Lock could work in a similar way. Gallifrey is still there, we know that much, but hidden behind a nearly impenetrable wall of timelock. Gone from the perception of lesser beings. Suspended in a single moment of (non)time (no causal connection to any other moment in time).
The timelock is not unbreakable, Dalek Caan did it and the Daleks are back in full force.
The Timelords nearly did it by finding that one thread left to the rest of the Universe and using it as a lifeline.
I appreciate the speculation, but it really doesn't jibe with me. Amy's situation was obviously unique and something the Doctor didn't understand at all until after some investigation, and even then all it required (a bit of hyperbole there, as it was obviously more complex than that) was for her to remember things and poof, everything was back. Even things she had no clue about, like, oh, everything
. Hell, one of the things she did
know about was the Time Lords courtesy of the Doctor announcing his race to her.
And, again, there's the massive paradox about all the things the Time Lords did throughout all of space and time prior to the Time War just <snap>
being whisked away into oblivion. Hell, it took everything the Doctor's TARDIS had just to maintain a tiny paradox on Earth for a few months. What could possibly maintain one that extends throughout every moment in time and every inch of space?
To be honest, I don't understand why RTD got rid of all the Time Lords to begin with. Eliminating stories involving them seems a bit crippling to me, especially if you're just going to introduce some anyway.