I always thought this was more of a technical hurdle since instances are on different servers and people might have the same names since they are from different servers - other issues like that.
No, it's not a technical thing. I believe in beta 3 they did mention that this was a decision they made and /tells and other stuff during instances are just "masked" and can be turned back on if they wish. Each character has a specific hidden ID so people with the same name can be treated as separate characters, on the rare chance they both are in a DF group together.

OT: I can understand them not wanting to let us dye AF gear but I would like every other piece of gear in the game to be dye-able. It's especially weird when random unique sets have a single piece that can be dyed.