Hello Kevin,
There are problems with the head activated shut off for both pressurised and micro-switched systems.
With your system (micro-switches) the fact that the button stops the flow of water can cause problems with the pump overheating. Most submersible water pumps rely on the passage of cold water through the pump body to cool the motor housing. By stopping the flow, the pump can warm up, causing the air pocket around the motor warm up more and pressurise and try to escape past the shaft seal. On cooling, the air pressure drops and can actually encourage water to be sucked into the motor housing. Over several cycles it is possible fill the motor housing to the point where the motor will fail prematurely.
With the pressurised system, when the shower valve is closed, the pump continues until it has re-pressurised the water system. The cold water pipes whilst they have some elasticity it is nothing compared to the necessary air cap inside the water heater. On opening the shower valve, the very elastic air cap in the water heater pushes hot water out, but largely maintains the water system pressure, so the pump does not kick in immediately, so no cold water is pumped initially. This can lead to a burst of hot water being ejected from the showerhead before the cold starts to mix. There is a serious risk of scalding, however that does depend on the temperature of the hot water in the first place, and other factors that may reduce the quantity of undiluted hot water ejected. Some solutions were to fit an air accumulator tank to the cold supply of similar size to the air cap in the hot tank to balance the hot and cold flows.
Some people have wired an electrical switch that turns the pump off, but this can lead to some hot water being ejected after the pump stops.
There is no simple 100% reliable method of doing what you want.