This is an eminently reasonable ruling and I's appreciates yous

It's up to the DM if it comes across like a portal to enter the bag or an impossible space like the TARDIS. Air does not flow between as you can suffocate and air would carry the sound, but I always rule it as feeling more like in impossibly large space rather than a magical portal.

Except if the guard manages to rip a hole in the bag from the inside, they can destroy the bag and everything inside it will get scattered across the Astral Plane. Pretty bad for the guard, but better than a slow death being suffocated. Plus you don't need to eat or breathe on the Astral, so they could live there indefinitely.

Bag of holding around the head. Tear it.

Would a person die in a bag of holding or is it like the Astral plane and bodily needs are paused?

This sort of thing always seem silly to me. Most of the people you kill go to the lower planes. What is ten minutes of suffocation compared to that?

If you think that you are the players enemy instead of guide maybe.

That seems like a good idea for parties that constantly exploit everything they can. One off creativity should probably be rewarded though.

Honestly if you wanna give your party a bag of holding, sticking it on a bugbear assassin who uses this tactic and then uses the bag to dispose of bodies is a fun way to introduce it.

Anything the players do, I be DM can do too, yt if it uses a niche magic item, the DM better be prepared for it to end up in the hands of the players.

This is funny, I see your point but would rule the opposite. Because the bag wouldn't be able to close due to a neck being in the way it wouldn't seal the pocket dimension and I would rule the guard would still be able to breath (and scream) through the bag.

It has enough air for one creature to breath for 10 minutes. And since the bag isn't closed when it's on the victim's head there is a connection between the pocket dimension and the material world through which sound waves may travel.

If there’s no air, wouldn’t it ruin a bunch of stuff you put in? Any liquids would evaporate, wood could deteriorate, etc. Is it also cold? That also causes changes to a bunch of stuff.

I thought it wouldn't make sense at first, but thinking about it more I think it does. Sound can't travel through the walls of the bug. It probably echos inside it, but there's not a lot of air around their neck for it to come out through, and sound doesn't travel well between gases and solids, so most of the sound would be absorbed. It wouldn't be perfect, but it would make it a lot quieter.

Is your bags drawstring made out of friggin piano wire?