Is is possible to have this only turn on when mousing over a building? Like a specialized alt mode for when you are hovering over an assembly machine or something?

Yes this is possible, not hard even. That said, I'm not sure how useful that would be; the goal of the mod is to catch your attention when something is wrong.

At what situation would you find this useful?

I was thinking to have it toggle between mouse over and full overlay, so you can use mouse over to check individual buildings, then full overlay to check an entire build

If you already see everything, why would you choose to not see everything?

I'm asking because switching overlay on/off is a relatively expensive action and I want to avoid it.

I was thinking of using the method described as a specialized "alt mode" of sorts to inspect specific areas. It would also leave an overall cleaner look to your factory when it is off, so you would have less information just sitting there when you don't need it.

Added this feature.

Thank you :)