The button label can either tell you the current state, or the action that button will do when pressed. Therefore, the spec is not fulfilled since it requires both state AND action.

A better looking and more intuitive UI is a toggle switch (courtesy of http://ui-cloud.com/toggle-switches-ui-elements/):

On/off latch or switch


This part of the answer is rendered obsolete by the updated mockups in the question:

The checkboxes give the wrong idea that both can be selected at the same time (Mutually exclusive options are represented through radio buttons, not checkboxes).