In the long run, special cases like that often turn out to be more trouble than they are worth. If an ordinary file happened to start with '~' it would not be handled correctly. So you either accept or ignore that potential problem, or you have to write extra code to work around it. It's safer to not have such special cases at all.
The original design decision was to behave like a shell, where ~ means your own home dir and ~fred means fred's home dir. With the benefit of experience, this is now seen to be unwise and a different decision has been made.
