if you run out of time the round is negated (both players score 0 points).

This makes the game matrix bigger for no reason. Maybe replace this with "if you run out of time, you automatically defect"?

There is a standard function for spending X instructions evaluating a piece of quoted code, and if the evaled code tries to eval code, it asks the outer eval-ing function whether it should simulate faithfully or return a particular value.

Haha, this incentivizes players to reimplement eval themselves and avoid your broken one! One way to keep eval as a built-in would be to make code an opaque blob that can be analyzed only by functions like eval. I suggested this version a while ago :-)