The problem with your suggestion is that they will have to maintain two codebases and support releases for the classic Firefox by proving security patches to them.
Not to mention more headaches for web developers as yet another browser shows up with its own bugs, differing support for standards like HTML5 and CSS3 etc.
Funny, because two codebases exactly what Firefox is doing with FF 10 ESR, but without the renaming. So I don't find his proposition stupid, at the opposite.
And come on, working on different codebases is a usual dev task, and every developer outside Facebook should know how to do that properly. Usually you have your shipped code and your development code, and you want to be at least able to ship a security fix without disclosing your new functionality.
Concerning your last point, if you don't like that you are probably at the wrong place for web developments, where you should at least support a dozen different browsers. For enterprise software, that means one can just support 10 ESR instead of 1x and everything new that comes at each release, possibly breaking the application.
Not to mention more headaches for web developers as yet another browser shows up with its own bugs, differing support for standards like HTML5 and CSS3 etc.