While I don't deny that the versioning has issues, I don't know that a date-based versioning system is the best way to go. I don't like the idea of going from 7.x to 8.x when there may have only been a minor change. Plus, you have no idea how many versions happened in between. Changing the "major revision number" makes it sound like there was a major revision. Like the game was somehow rewritten from the ground up or ported to a new game engine. It's deceptive.
As for why the game is still called "alpha"... it's because it is. In my book, alpha = not done. Beta = done, but needs testing. Final = after bugs in the beta are fixed.
I just don't feel the game in its current state is "done". It's still a heavy work in progress.
- Most of the sounds need to be replaced, as they're low quality and contain copyrighted material.
- New model format is implemented, but needs LOD support and many meshes need to be re-done.
- Lots of low-res and even 8bit textures need to be re-done.
- Map format needs a complete revamp, allowing for more detail, better outdoor support, embedded meshes, LOD, etc.
- Sound system needs a complete revamp to better take advantage of the 3D audio most cards support these days.
Also, you have the game code which has its own version system going on (hit 1.9x when the global login system was implemented).
My plan was to get some of the key things done, like the new map format and a media revamp, then switch everything over to a uniform 2.0 beta, after which I'd start a 2.xx versioning scheme.