To be honest, despite what Notch said
several years ago I don't think it was ever well on its way to being open-sourced. Any hope that he would "clean it up" vanished when he lost interest in taking active part in development and passed it on. Not to mention that they've been working on a public modding API for years that never took off.
> Instead now we have the DMCA-infighting and an atrocious modding community that hosts their source code on shady file upload sites, make their measly money from adfly-like sites and have never heard of Github.
Couldn't agree more, but it's more of a consequence of most modders being new and inexperienced developers and kids. Some of the bigger and more professional modding projects like Bukkit are already hosted on GitHub [0], so I wouldn't blame it on just being closed source. It's not guaranteed that it would be that much better, though it might be because that way a lot more existing developers might feel like contributing.
[0] https://github.com/Bukkit/Bukkit