I'm not following this thread all the time, so I missed a few discussions about whether Mastercoin should or shouldn't be an alt chain.
I just want to state that I agree with Willet 100% that it shouldn't be, and actually started another thread just about this topic:

(If you want me to see you response, try posting it on the other thread, I will be monitoring that one more frequently ... just copy-pasting here for the lazy)

One important reason I'm not moving to an alt-chain is the distributed exchange between bitcoin and MasterCoin, which isn't possible if we are on an alt-chain, since it requires using data from standard bitcoin transactions AND MasterCoin transactions to work.

I don't think I've mentioned that reason anywhere else, but it is probably the primary reason I'm not even willing to consider it. There are other reasons, like total cost of development, and even the dirty stink of starting yet another alt chain (For instance, bitshares is doing it "right", but they were banished to the alt section with all those scam coins, which they of course bitterly resent).

I am totally convinced that building on top of bitcoin is the right way to go, for all the reasons here and above in Ron's posts.