Yes, throwing it out would be suicide, since it'd break every module out there. They're revamping it while keeping backward compatibility, though, and the new API is definitively nicer.

http://www.slideshare.net/openobject/presentation-of-the-new...

Looks like it: https://github.com/odoo/odoo/blob/master/openerp/osv/orm.py

I cannot understand why anyone would not use SQLAlchemy if they're building a database-backed Python application.

True today, but not 10 years ago :)

Plus Odoo ORM and SQLAlchemy have different purposes.