With that said, is MC even salvageable at this point? I was browsing the Minecraft Reddit and there's a lot of crying foul with this update from folks running palm pilots to Mach5 battle cruiser systems. The other end are people exceedingly happy. Its a confusing, mixed bag. Since you've delved into the code, I'd be interested in your insight.
Also if it truly is this bad, would a complete re-write in another programming language be what's needed or fitting for Minecraft 2.0?
I think rewriting it is mostly out of the question, unless they meant to sell a brand new game. There's just no incentive for them to put that much development into something that makes them no new revenue from existing customers. But I would hope that they stick to Java, just for the modding aspect alone. You can get good performance out of Java when you actually try. Ironically, Minecraft has been a good example of that.
That being said, I see no performance benefit on my machine in 1.8. It's worse, if anything. My brother, on the other hand, can't play the game at all anymore. 1.7.10 runs fine for him, probably upwards to a hundred fps and always smooth. 1.8 runs at 70+ fps until he starts moving, at which point it drops to a crippling intermittent 12-15fps, which immediately corrects itself when he stops moving. Meanwhile, the server I set up was losing a lot of ticks and outputting a lot of "can't keep up" errors using the same settings I always used before until I upped its memory usage. Unfortunately that doesn't solve everything, particularly the very annoying mob behavior where they slowly descend to the ground after a hit, even though this was in all of the pre-releases and still wasn't fixed. Another notable event is when everyone got dropped, and when I relogged, I was inside of a wall I had just dug out.
This is what concerns me about the number of classes. It means the game is far more complex than it used to be, and very suddenly at that. They're not fixing very obvious bugs which should have never made it into the final, ones which I would have had in the "don't release until fixed" list. Maybe they can't even find them, for all I know.
I know that this isn't necessarily a new thing, it tends to take them a few versions to get any major update truly fixed, and I'm not going to fault them for everything. That flower that blinks into place when you break tall grass, for example, is obviously a low-priority bug. And let's be honest, they don't have to keep updating the game at all, and there's nothing stopping us from playing older versions. But with the game being this large and growing, I can only imagine that the time spent chasing down bugs is only going to grow as well, which doesn't bode well when they haven't even gotten to the API yet.