Agreed, it always seems like they are adding steps in, but need to make the final stretch. I am almost certain player indicators are supposed to be faded for non-local players (which would definitely make spotting easier).
Like you said, in the final game with 20 characters + alt skins, it will be a lot less prevalent. But alt colours really aren't as prevalent as they should be, Radecs' alts being a prime example. Why can't Radec's colours be Black, White, Red, and like Yellow? Sure, he'd look like a Power ranger, but his first alt is like his default.
There's no reason that they can't even do something like different shades of the same colour for the same team. If I want to play a team of 2 Parappa's, the indicators should at least be red and like orange. Lots of ways they can fix this problem.
Right now my issue is presentation. Bigger, better HUD avatars, better win screens, more dramatic theme song (Final Boss music is perfect), kicking up super 3's and OT's with epic music, etc.