OpenGL is an API that takes instructions from a program and turns it into a format that your display can understand: there is no bound on the number of lights it can support. It's an industry standard. As an example, Pixar used OpenGL to render their movies and I'm sure we can agree that they used more than 8 lights in their scenes. I mean, there's a lot of complaints about opengl in this thread but what would you prefer? Direct3D? Is it really any better? Do you know anything about D3D or OpenGL because I don't, and I'd appreciate if you would share.
The lights behave the way they do because it's the way Badspot decided they should work for now. It's definitely not optimal or particularly pretty but that's just how it works. I think it's a totally valid complaint, but broken isn't really an accurate description. Unfortunately I doubt it's as simple as buying the torque lighting kit (is it even available anymore?) and throwing it in the game.
I think things like lighting, shadows, and effects like motion blur, sharpening, bloom, film grain, colorization, night vision, etc, are things that could have a great effect on the game even if they were only marginally improved. If nothing else, opening up screen effects to modders could lead to a lot of really cool mods.