You know, I think it would probably be ok for this ability to erase past age penalties. I mean, there are really only so many ways for this to go:
1) Character reaches Timeless body when old, it confers no (or greatly reduced) benefit.
2) Character reaches Timeless body when young, campaign skips forward 30 years, character gets bonuses to mental abilities.
3) Campaign starts high level, choice between #1 and #2 is entirely up to the character.
Now, the difference between #1 and #2 is certainly pretty big. However, #2 is entirely possible, and the game doesn't seem to be discouraging it in any way. So, all not removing past penalties does is penalize players in position #3 for picking #1, even though #1 is far more likely of the two options. I mean really, how believable is it that someone got to 17th level by the time they were 30 and then did nothing for twenty years? I can certainly see it happening, but it's a fringe case and certainly shouldn't have significant mechanical preferencing.
Also, I think it would be a very cool but essentially impotent change to remove the clause about the druid still dying when his time is up. Dying when your time is up is a pretty useless ability, really, since it can almost never come up. It just means that if you want to play a high-level druid who's been around for thousands and thousands of years, you can do that.
(These suggestions also apply to the Monk's Timeless Body).