Hi T.,
The economy is bad and job prospects are poor in many areas of the country (I don't know how things are in your neck of the woods). I think, over all, that your plan is very sound, except before you tell your boss you're ready to leave, make sure you have a solid offer in hand for elsewhere. The general rule of thumb *before* the recession hit was to expect it to take 1 month of searching for every $10K in salary you want to be making. So, if you're looking for an $80K job, for example, figure on 8 months of job search, on average. In this economy, I would double that number (16 months).
You don't have to wait until your vacation to start job searching and networking. I would get started on linked in and any alumni or social networking sites you connect with right away, and start looking for job fairs in your field. Ask friends and associates if they can recommend a good head-hunter, career coach, or executive recruiter in your area, too.
The other thing you should make sure of is that you have enough financial buffer to last through your search period, should you decide to leave (or are forced to) before you have another position.
As for 20 years with one employer, it can happen if you're with a good company in the right industry, but people these days advance mostly by moving around. Companies don't have the sense of loyalty towards employees anymore, either.
Good luck though! I hope you find a new position (and boss!) with which you'll be happy.