The stock, products_quantity, is reduced at the end of the order, regardless of the orders_status as the product is considered "purchased" or "reserved" for the customer who ordered it ...

If I order a Red Widget that I "purchase" via credit card or check or COD and say I will drive out to your store and pick this up ... but you do not put it aside for me and sell it to someone else ... when I get to your store I am going to have to say some nasty choice words for wasting my time and gas as you thought my "COD" was not as "important" as someone who paid in another manner ...

Are you sure this is something that you really want to do?

Stock tracking is currently managed based on if you have it turned on or not ... and if not a Download, then the Stock is adjusted with the order ...

You can custom code this to manage stock differently, but I would really be cautious on the affects this might have and issues with your customers ...