/nick does not hide the name above your head. It's primary use is to obscure your name over the chats, which has and always will be the wrong use of the command.
Not gonna try and start a fight over this, but I'd argue that kind of (as a player) paper-thin-disguise adds to immersion. Either way, as stated earlier we're looking into ways to get nicknames working with the system.
Oh.... Well..... BUZZ LOOK AN ALIEN! *makes his smooth escape* But yeah, I didn't know it didn't change overhead names Dx Whoops.