i would love to see them make an explicit BC break and fix everything listed at http://phpsadness.com/
The correct approach is slow and steady improvements. I suspect standard library improvements will come not by renaming existing functions but by adding new API.
Then you can do extensions [even changing central functionality] in a sane way, with backward compatibility. (A language implementation need to implement deprecated features for older versions, of course.)
I agree with your point re APIs.
set_minimum_version('My/New/Component', '5.7.8');
This could be called in the component itself or maybe by a composer autoloader. Then PHP components that expect different version could live together.The big problem, as you mentioned, is that the interpreter would have to maintain all the deprecated features and behavior for older versions and that would make development and maintenance of PHP much more complicated.