"There is an enormous difference between getting software wrong -- all software has bugs -- and deliberately misrepresenting your product to get extra beta testing."
They didn't lie, they were very upfront about it. They didn't claim the release was "Stable" far from it, they announced a rapid development plan with frequent releases. They wanted the distro's to make KDE4 available, to encourage participation, and application porting.
Aaron Seigo, said clearly at the time, that making a 4.0 release was necessary to get this to happen, it was a very clear implication that quality was going to suffer. If you go back to Jan 2007 on this site, you'll see discussion on the very point. The PR train wreck was all too predictable, I think they could have handled it better, but it isn't their fault, the apparent blind enthusiasm with which the distro's pushed out the packages, without the stable KDE3 fallback, which received 2 updates in the past year.
Any body with any experience, knows re-writes of large projects tend to either never ship, or ship initially unstable and feature incomplete. This is one of the big reasons to prefer evolutionary, not revolutionary development.
There is a problem with version numbering. With a new project, releasing version 0.x.y signifies pre-production status. 1.0 is a milestone.
How does a widely used project redevelop? May be the project could be re-labelled, KDE4 or KDEng and then a 0.0 version number is a big warning sign to you.