That's actually a pretty idea, to use distances between said waypoints and alpha1, since it creates smoothed transitions. But the equations and implementations should be discussed. There is the potential to screw it up bigtime. Suppose you have a waypoint in 0,0,0 with maxfogdistance of 10 000. Then you have a waypoint in 0,0,2000 with mfd of 2000. And you have a ship located @ 0,0,6000.
If you'd go straight ahead, you'd see the ship, then you wouldn't, then you'd see it again, in a very unrealistical way.
OTOH, it could possibly create mesmerizing experiences (a la Ransom).