Heh kerfuffle - great word for the whole S&W...um...thing that's going on. James M at Grognardia has some good things to say (for what it's worth, I think JimR over at LotFP also gets it mostly right).
One thing that James M indicated in his post & in the comments section is that the new cover isn't very appropriate as the new cover for S&W (paraphrase). I really like the new cover. I think that it's evocative of adventure, the weird underground city, village, shining...um...whatever it is. It's very cool. And so I like it.
I didn't think about the idea of establishing the look for the line.
The image, while pleasing to me, just isn't memorable enough to say "This is what Swords & Wizardry is all about." It'd be better for an expansion, maybe an adventure (I'd buy the adventure that explores THAT place) or even a S&W type Dungeoneer's Survival Guide (though...um, more useful than the original perhaps?)
Anyway, establish the look with the rulebook cover art.