This post doesn't answer your question about when the stock shock needs serviced or replaced, but here's my experience and offering a solution.
The stock suspension is hot garbage unless you weigh under 150#, so if you are running good times with it, you'll be blown away when you upgrade. Is your front suspension stock?
I bought this shock a few years ago for my 2nd Gen SV650 but after realizing how hard it is to swap out the rear shock and already having a ZX14 rear shock on mine, I don't think I'll ever get around to using it. I don't remember the specifics of the dog bones, all I know is that I did a ton...
forum.n2td.org
If you want to give this setup a try, I'll let it go for $40 shipped. I have been using the ZX14 shock that came on my bike for 6+ years and never got around to swapping it out for this. I don't know the condition of it other than it's clean. I bought it on ebay. The GSXR dog bones from the pictures won't work and take up a lot of shipping space, so I will pull the lower shock bolt off and send it with the shock and aftermarket dog bones.
Here's the SV shock compatibility spreadsheet:
docs.google.com
The spreadsheet has been on the internet for well over a decade and idk if it's been updated correctly, but it will give you a good launching point to research shocks.