I agree too. SWCs are great for closed libraries or stuff that you'd never really want to modify but they don't hold many advantages for something like FlashPunk where a lot of people like to hack it.
Regarding the current state of the codebase - only big downside to that is some of the newer commits can be buggy. For instance there were two instances where I had to roll back due to stuff not working correctly (I believe it was particle gravity from a few months ago and world entity removal causing flickering sprites in some cases). I don't know if some newer users would have the knowhow to do this themselves.
And yes, I should submit bug reports... I've had a crazy month so far