A couple of points - 1) this is in early development and not even reached public testnet phase - the amounts floating around the alpha-testnet are not representative of the final chain.. 2) since the white paper the block selection algorithm has changed from proof of work to proof-of-stake. I like the idea of bitcoin balance importation but may ditch it as it reveals the bitcoin public keys of those who do, something i'm obviously not in favour of.
The current plan is for an initial release of the coin supply to allow proof-of-stake to function correctly. Whilst I like the idea of a 21 million upper cap (after 200 years) the exact size is up for debate as is the initial release methodology. New coins generated through p-o-s block creation will tail down with an exponential decline to a hard ceiling - that i can say for sure.
Why do you say the supply seems massive? Ethereum released over 70 million coins, no?!? :-) A release of 2-5 million coins seems reasonable to me in comparison.
Peer review is an interesting and important point. The post-quantum hash-based signature scheme (xmss) has been peer reviewed in the literature. To my knowledge there are only two working implementations of the signature scheme in existence which are open source - mine in python (http://github.com/surg0r/lamport) and a C version by A Hulsing. The QRL is open source and accessible on github (http://github.com/surg0r/QRL with the sig scheme contained entirely in QRL/merkle.py). All peer review very welcome indeed!