Would a combination of "Afterburn Duration Fall Off based on Distance" and "Minimum Afterburn Duration on Splash Damage" make this issue disappear? Or would an additional Flare direct damage Fall Off be needed?

Why though. I only see this as a counterplay to poorly placed Stickytraps, which in turn would just enforce better placement and create interesting mindgame interactions between Trapper and Minesweeper.

Detonator and Scorch Shot AoE Radius: 110HUs
Rocket, Grenade, Sticky AoE Radius: 146HUs (that's 2.3 times the Flaregun's AoE in volume)

Detonator Damage: 23/30 Direct, 11-25/33-38 Splash, +60 over 7.5", can be reduced or removed
Scorch Shot Damage: 20/46 Direct/BothHits, 10-20/13-26 Splash, +60 over 7.5", can be reduced or removed
Rocket Launcher Damage: 48-112 Direct, 24/48-56/112 Splash
Grenade Launcher: 100 Direct, 50-100 Splash
Stickybomb Launcher: 60/120/144

Detonator and Scorch Shot Total Ammo: 16
Rocket Launcher Total Ammo: 20
Grenade Launcher Total Ammo: 16
Stickybomb Launcher Total Ammo: 24

Detonator and Scorch Shot Projectile Speed: 2000HU/s
Rocket Launcher Projectile Speed: 1100 HU/s
Grenade Launcher Projectile Speed: 1216 HU/s
Stickybomb Launcher Projectile Speed: 925-2409 HU/s

So with lower fire rates, significantly smaller AoEs, similar or less spam Damage, similar or less total Ammo and only faster Projectile Speed, I really don't see why how are so extremely spammable that the are ban worthy.

from the Global Whitelist January Update:

Scorch Shot & Detonator
After last year’s Jungle Inferno update, afterburn damage was increased to compensate for the reduced afterburn time of flamethrowers. This meant that the Scorch Shot and Detonator received buffs without the introduction of any downsides.
With their increased AOE damage, extreme spammability, ability to remove stickies and afterburn’s effect on healing rates, we feel these weapons are now out of place and will be banned as a result.

To begin with some technicalities, their AoE damage wasn't increased, their DoT DPS was increased but their DoT total Damage remains the same. 20 ticks of 3dmg changed to 15 ticks of 4dmg, 60dmg both in 10 and 7.5 seconds respectively.

Extreme Spammability.
Grenade Launchers Rate of Fire: 0.6"
Stickybomb Launchers Rate of Fire: 0.6"
Rocket Launchers Rate of Fire: 0.8"
Flareguns Rate of Fire: 2"
e x t r e m e l y s p a m m a b l e
edit: even if you shoot-reload-repeat GL is 1.24, SL is 1.09 and RL is .92

Ability to remove Stickies is a decent point, though by placing traps on walls or above doorways the Scorch Shot can't hit them, and the Detonator needs to self detonate with a correct timing to actually hit and break the Stickies. I won't go on about if it's strong or not because I'm definitely not in the skill level needed to judge this for top level competition.

And last but definitely not least, "afterburn’s effect on healing rates" is just false. It has been tested and verified that only the Flamethrowers' Afterburn (even excluding the Dragon Fury's) inflict this debuff. No Flaregun does.

I think that keeping these Weapons banned is wrong. I won't argue for the Scorch Shot, because fuck its borderline stun mechanic knockback, but the Detonator is the most interesting Pyro Secondary and by banning it we just lose out on interesting gameplay and interactions.