This is a resurrection of this IDEA - 

1. IDEA-75

Upgrading moodle (without git) is a painful process simply due to the fact of having to track down all the plugins.  It would be much cleaner and include all of the benefits listed in the above referenced idea if we were to make Moodle more like other systems (Wordpress, for example) where all additional code is contained in a single folder either in the moodle code folder or outside of it for additonal security.