In the original post on the TW forums IIRC it was stated that the "c" was for character, as in persistent characters in the mod (the main selling point of cRPG back then). But who knows, that was back in the age of myth, and the mod has changed since then.
Back to the main topic: I agree with Teeth. Playing this mod since release has always been about absurdity and fanciful role playing for me. Sure strat might add a new layer of features and game play but cRPG isn't a platform for strat, strat is just another game mode in cRPG. Keeping this in mind the felt hat design (maybe simplified), in my opinion, embodies the nature of cRPG: Al_Adin/Ja_Far, peasant wars, a dev team that enjoys playing the mod as much as the community, and fun.
We have a dev team that enjoys shenanigans as much as anyone else, and it seems wrong to me that cRPG should be represented by something high-intensity/super-serious/gritty(/sexy/beautiful).
People play games because they're fun, cRPG's logo should represent the enjoyable aspects of playing.
EDIT: And please don't change the name of the mod to some over-hyped, melodramatic, cliche shit. cRPG is quirky and strangely unique.