furlough is one possible translation for Urlaub and should remain in the dictionary. The fact that someone might get the wrong word is unfortunate, but is kind of the nature of LEO, which gives a German-English correspondence, not a complete definition.
LEO aims to provide the "common" translation, as well as the less frequently encountered or more technical translations. Any given translation isn't right in all contexts and LEO doesn't claim that they are. For example, look up "plate" in LEO Siehe Wörterbuch: plate
and look at all the various German words that are suggested just with the tag "tech." Obviously when more than one translation is possible, people either need to have enough knowledge to select the proper term or consult a source that gives more detailed definitions to select the proper one.
Furlough and Urlaub should stay linked, as "furlough" is a perfectly "normal" English word that sometimes is correctly translated as Urlaub.