> It seems like they don't have the source code for the tool anymore

I think they never owned the source code. https://en.wikipedia.org/wiki/Microsoft_Office_shared_tools#...:

“Equation Editor was a formula editor developed by Design Science that allowed users to construct math and science equations in a WYSIWYG environment, and was included in Microsoft Office and several other commercial applications. It was a simplified version of Design Science's MathType”

> MS should write an alternative to the tool (and I believe they have done so at some point in modern versions of Office)

Indeed, and the first version they did that in cannot be called modern anymore. From that same page:

“Beginning with Office 2007, Equation Editor is no longer the default method of creating equations, and is kept for compatibility with old documents only. Instead, a reengineered equation editor is included”