"Problem is, this can't be fixed, because otherwise if zou release Alt, the head snaps back violently, causing desorientation. The current solution has been picked as a compromise."
This is absurd. It's far more disorienting to have the sluggish freelooking. After all, I know exactly when I'm releasing the ALT button and therefore am already expecting my head to snap back -- this is far, far less disorienting than having inconsistent mouse velocities.