I feel that desiring a representation of your name in-game in exchange for a donation is egotistical. It's human nature, though, and understandable. That's what the Champions page is for. It gives people a public aknowledgement (that some crave more than others) and sometimes encourages others to donate when they see the list.
"Oh, cool. Hey, I want my name up there so that people know I helped make this game, too!". Now some donators may pay even more to have their name in the game, but at what cost? I think at cost of damaging the game*, you obviously don't agree (hence the OP) and that's fine.
What I'd like though, is for you to really consider your motives for in-game representation and provide a better explanation than
it would be nice
Why would it be nice? Because right now I think it's an egotistical request, a desire to have your own unadulterated mark put on the game before you donate, and put somewhere where people playing will come across it and be forced to acknowledge that you donated something rather than only knowing if they take it upon themselves to check the Champions page. I can't fault anyone for wanting that but I don't think it should be indulged. Maybe there's more to it than I am seeing.
The only way I'd be comfortable with this is if there was a time limit put on the names. So you donate whatever and you're in for the current release but then have to donate again if you want to be in the next release. I personally wouldn't like it because it would affect my game experience, but it'd be tolerable for a work in progress alpha in my mind and hopefully they'd all get dumped and not go into the mythical version 1.0. But I'm just one guy and if it makes Toady more money and he wants to do it I'd live with it. A compromise would be to put it in a section like the "About DF" option on the main menu screen. That way it can be more prominent for the donators who need that while not risking the game experience for others.
* compromising immersion, atmosphere, theme etc etc