There is no goal for testnet to be POW or permissionless or without a central authority.  It just exists to help the developers of the software test it.  It is not a currency, it is a testing fixture for the developers of the software.  Any time it turns out to be less good for the testing its developers intend for it, it'll get discarded and replaced with an updated test fixture.  This is no different than throwing out calipers with chipped jaws or a shop rag that is too oil stained.  To the extent that testnet might have some relation to those things (like having POW) at all is simply a product of the fact that it exists to test the Bitcoin code.

All versions of testnet anyone in these discussions has ever used, except for me it seems, we all created as resets after some prior version became harder to use due to someone trading it for value.  All the resets have made changes to discourage that activity, but of course anytime you build an idiot proof contraption someone goes out and builds a better idiot.  No big deal, since it doesn't cost anything to reset.  Testnet3 took a bit longer to drop than it should have simply because those of us responsible for the prior ones had long left the project.  I expect further resets will happen more quickly.

reflected in the public chat logs:

As I said about testnet2 after testnet1:

2011-07-11 21:40:20|Blitzboom|someday, someone will make a TNC/BTC exchange
2011-07-11 21:41:29|gmaxwell|Once people start trading testnet coins for real value the developers will break the testnet chain again.
2011-07-11 21:41:49|gmaxwell|This was done before, and I expect it will keep happening, otherwise testnet stops being useful for testing if its hard to get coins.
2011-07-11 21:42:40|gmaxwell|It's testnet. Run a fork of the old version if you don't like it.
2011-07-11 21:45:05|gmaxwell|besides, the value is a joke regardless. I could remine all of testnet in a few days if I wanted to blow a bunch of btc breaking it.
2011-07-11 21:46:28|gmaxwell|It's in our best interest that testing be as cheap as possible, thats why its testnet.


(conversation went on to propose resetting it again, resetting it with every release, etc. eventually Matt proposed the 20 minute difficulty 1 rule)


or about testnet3 after testnet2:

2012-12-14 17:28:13|MC1984|all i can surmise from this is that testcoins are worthless lol
2012-12-14 17:28:31|gmaxwell|    "balance" : 618774.51859299,
2012-12-14 17:28:36|slush1|MC1984: yes, I had 100k of them, still 70k remains
2012-12-14 17:28:42|slush1|if you want some more, just ask :-D
2012-12-14 17:29:34|MC1984|mfw some retard starts a testcoin exchange and lots of other retards jump on and suddenly im part of the 1%
2012-12-14 17:30:47|gmaxwell|MC1984: that problem was solved before by resetting testnet when people started demanding real amounts for them.
2012-12-14 17:31:20|MC1984|oh it did happen lol


or

2013-08-24 13:49:10|rodarmor|Question for someone smarter than I: Would it be helpful or harmful to development and testing if I were to create an app or game that integrated testnet coins and testnet chain transactions? I was thinking about a simple gambling game, or a strategy game that used testnet coins as an internal currency.
2013-08-24 13:49:31|gmaxwell|rodarmor: have a blast, make more testnet transactions.
2013-08-24 13:49:38|Luke-Jr|rodarmor: IMO it might help, simply because it gives testnet more activity
2013-08-24 13:49:47|Luke-Jr|certainly shouldn't hurt
2013-08-24 13:49:49|rodarmor|That's what I was thinking.
2013-08-24 13:50:05|gmaxwell|rodarmor: also if your stuff gets more people using testnet, I will buy you your choice of beverage.
2013-08-24 13:50:23|rodarmor|Although, haven't there been problems in the past when testnet coins somehow gained value and the whole thing had to be reset?
2013-08-24 13:50:34|gmaxwell|rodarmor: yea not really a problem now I think.
2013-08-24 13:50:37|rodarmor|gmaxwell: thanks, I will definitely call that in if this comes of anything
2013-08-24 13:50:46|gmaxwell|and if it needs to be reset again we can of course.
2013-08-24 13:51:10|gmaxwell|But I also own like a million testnet btc, so I suspect I can just dump coins to suppress any gain in value.
2013-08-24 13:51:11|petertodd|rodarmor: Worst comes to worst we'll just add a infinite money generator to testnet, and as gmaxwell said it can be reset on a dime.

There is no goal for testnet to be POW or permissionless or without a central authority.  It just exists to help the developers of the software test it.  It is not a currency, it is a testing fixture for the developers of the software.  Any time it turns out to be less good for the testing its developers intend for it, it'll get discarded and replaced with an updated test fixture.  This is no different than throwing out calipers with chipped jaws or a shop rag that is too oil stained.  To the extent that testnet might have some relation to those things (like having POW) at all is simply a product of the fact that it exists to test the Bitcoin code.

There is no goal for testnet to be POW or permissionless or without a central authority.  It just exists to help the developers of the software test it.  It is not a currency, it is a testing fixture for the developers of the software.  Any time it turns out to be less good for the testing its developers intend for it, it'll get discarded and replaced with an updated test fixture.  To the extent that testnet might have some relation to those things (like having POW) at all is simply a product of the fact that it exists to test the Bitcoin code.