I'm really torn between the two options. I would personally prefer to have a full-blown release, but I'm going to base my post on which option would benefit the mod the most (in my opinion).
I'm leaning towards the two phases option. From the sound of it, you guys already plan on having two phases of the build, but it won't be public. I think if the phases were to be made public, the final build would be better and more stable than it would be if you guys decided to wait until everything is done. The amount of bug reports you guys would (presumably) get would help a ton, and there is room for suggestions to help improve gameplay (even though it most likely won't be completed by the time the first phase comes out). You would also open a new window of opportunity for the modding community. By releasing the first phase, people would have a taste for what they can do to release custom content for the mod and have it ready for when the final phase comes out. There's even a possibility that talented artists could create content for the first release, and eventually find a spot on the team to help complete the final build.
However, there would also be negatives for going with the two phases. I can already tell that people will be taking the first phase as a more polished, upgraded Open Beta and be unhappy with what was released. Others will probably either misunderstand the point of the phases, or completely ignore what was said about them and assume that this is the intended final release. While these might be minor issues for some people, I really think that a lot of context would need to be added and it would be need to be made clear that the first phase is not the intended final release.