I bet the developers have thought of rewriting it using OOP and an MVC pattern, but all current plugins and themes would have to be rewritten as well. It's not so bad, since you'd only need the top few dozen plugins and themes rewritten to get traction. I'd be willing to help out if anyone here is brave enough to try a rewrite!
WordPress is abandoning support for PHP4 and MySQL 4 in version 3.1. This will allow them to incorporate many of the features in PHP5 they haven't been able to do yet such as stronger OOP. http://wordpress.org/news/2010/07/eol-for-php4-and-mysql4/ It doesn't need a rewrite. Instead, work with the many brilliant devs who have been improving it for years and know it inside-and-out -- including its flaws and areas for i…
The only reason they are abandoning PHP4 because it has become so rare they can't test against it anymore, not because they want to improve anything. Remember this crap: http://ma.tt/2007/07/on-php/ ?
Which is typical for WordPress: one of the most successful companies to be built on PHP, and all they do is bitch about it and use their influence on a part of the community to hold it back instead of contributing, like Facebook, Digg and such.