You raise a good point on some of that. However, unlike Minecraft, which has central auth servers, that's not something that will exist with AVWW. So the only way we have to uniquely identify you is with the customer id built into your license key. Going along with that, it's not even between us and you and the server, it's just between you and your own server, which cuts out the middle man -- if Arcen disappeared the next day, you'd be unaffected in your ability to enjoy the game in its then-current state.
The model we're using also has some portability advantages under that model in that, even without a central server, you don't have to log in to get your character back if you play on multiple servers. For instance, if you frequent 10 different servers you don't have to try to set up different logins and passwords on each one. On the flip side, if you run an open server and some jerk griefer just won't leave you alone, you can ban them based on their customer id and have them blocked unless they have a second license key. Kind of like banning someone in Minecraft unless they have a second account; but again, without the central servers here.
The point you raise about multiple installation is a good one, but it's not really as bad as that; right now, you'd really only have to have separate settings.dat files that you swap in and out. To be frank, given the amount of customization in each settings window, I wouldn't be surprised if you wanted each set of configuration settings to be completely separate, anyway. If you use separate keybindings from your brother, for instance, you wouldn't want to have to rebind every time you get on his machine or vice-versa. So really I think this goes beyond the customer ID, and really encompasses "settings in general," though obviously the customer id is one big part of that.
We already have plans to have a secondary "username" field that can be paired with your customer ID (optionally) so that you can have multiple players use the same customer ID (just not at the same time; but if you and your spouse both played in the same world at different times of day, you could have just one copy of the game, one customer ID, and two usernames set up to each have it remember your characters individually; only if you wanted to both play together on the same server at the same time would you need two keys).
Anyway, I think what you've illuminated here is a need for us to really split the entire settings and keybindings out with these usernames, and have each username capable of having its own license key (and thus customer ID) with it. Right now you can already do that just by manually swapping out settings.dat and inputbindings.dat files, but what we really need is a way to have multiple copies of those two files get logged on the machine, and each one is then selectable inside the game. So when you switched profiles, it would literally change all your settings and keybindings, and would use whatever license key you decided to associate with that username (be it the same one as another username on that same machine, or a different one, it doesn't matter).
I think that would give the flexibility you're looking for, plus the flexibility for multiple people to use the same key at different times, etc.
This would be a good one for mantis, but I'll flag it by Keith just to make sure he sees it.