Looks like I missed the boat on this by a few years. I played and loved EQ till around the release of PoP.
Is this the best/only decent server to have the pre-Luclin experience on?
I've heard by this point in the server's life a million+ character names have been taken. Do the admins do anything to remove name squatters or allow you to have a name from an account that's been inactive for a year+?
Have they said anything about releasing a new P1999 server to start new on some time in the future?
Yes, it is the best. A lot of shady shit has gone on in the history of the server but Daybreak unexpectedly granting the server official recognition was an unexpected event that changed everything. A former guide posted skype logs showing that a former GM made $10k selling items off banned characters. With Daybreak giving Project 1999 official status as a fan project, you can expect security to be way tighter and incidents like this to be fewer because they don't want to do anything to risk that relationship with the IP's owners.
And yes, project lead Nilbog recently posted that there are still plans for a new blue server once Velious is complete but they are several patches away from that so maybe next year some time? In the meantime blue is fun to level up on due to high pop, just don't have high expectations about the raid scene if you make it that far.