"But it delivers few of the practical benefits that were meant to stem from the term (control of your devices/computer, the ability to modify the software you use)."

Of course it does. A lot of people I know run community mods of Android of their phones, or at least used to do so for a while. Cyanogen seems to be a popular choice: http://www.cyanogenmod.com/

That some phone vendors choose to make it difficult to install your own version of Android is not the fault of Android. Maybe Android could have a license that forbids the practice, but it would be debatable if that would be more or less open. Also I'd argue that if you care enough to install your own custom OS, then you are likely able to figure out which phone to buy (ie Nexus One).

It seems however that the "only publish source code of releases" poses a problems for vendors considering releasing Android based hardware. It probably gives Google at least a little bit of leverage.

Which might be a good thing - most anti-Android people seem to complain that Google is not able to exert enough pressure on manufacturers to maintain quality standards.