My heuristic is that most health issues are non-linear with a "healthy middle ground".

Not everything has a healthy middle ground though - work could be like radiation exposure (linear no threshold model). That's probably more for "work-related toxicity", both mental and physical, rather than work itself.

I think not working at all could affect your mental health if you didnt have decent substitute

There are two extremes here. One extreme is excessive work while the other is no work. In between the two lies a range of working hours which is tolerable to humans.

No, being sedentary also raises your chances.

No. Citation?