He also doesn't mention the distinction between "infer" and "imply", which so many people seem confused by.

My undergraduate students have been known to voluntarily read Hacker because she's interesting. You can see the publisher's puffery here:

http://www.bedfordstmartins.com/book.asp?disc=ENG&disc_name=English&@id_course=1058000064&cd_booktype=HDBK&id_product=2001003087

The downside is that textbook publishing is such that Diana Hacker has essentially cornered the market on English handbooks.

The use of uppercase for the first person singular is aa manuscript convention that appears in Middle English to differentiate the first person singular from an ordinary lowercase letter; otherwise the first person singular often appears to be part of the preceding word. It's pretty easy to be confused this way, especially since word spacing isn't always optimal in manuscripts, and in very early mss., there is no word spacing.

I can't give you an exact date for capital "I" becoming formal practice. I can tell you that "I" isn't capitalized in the Cotten manuscript of Layamon's Brut, which is roughly 1208, (where I is still often "ich") but it is capitalized by the late fourteenth century Auchinleck manuscript. These are the two extremes that I have readily at hand.

Now, I was referring to Middle English, not Old English, since Layamon is technically Middle English, but you do see ich in manuscript (not in nicely edited editions, mind, but in the manuscripts) of Old English texts. You'll even see ich listed as a dialect marker in Mosse9's Handbook for Middle English. Ich is the stressed form in the South, and in the Midlands (where the scribe who copied Layamon lived). Scribes, just in order to give people like me something to do, also use ih, i, I, ic, and y, and once printers got involved, printers even employed J and j for the first person singular pronoun.

Hic hic:

Quanne hic se on rode
Jhesu, my lemman,
An besiden him stonden
Marie an Johan,
And his rig iswongen
And his side istungen
For the luve of man -
Wel ou hic to wepen
And sinnes forleten
Yif hic of luve kan,
Yif hic of luve kan,
Yif hic of luve kan.

Wenne Hic soe on rode idon
Iesus mi leman,
And bi him stonde
Maria and Iohan,
His herte duepe istunge,
His bodi scurge issuenge
For the sunne of man,
Hithe Hi mai wepen
And selte teres leten
Ief Hic of luue chan.

Hayl Mari,
Hic am sori;
Haf pite9 of me and merci.
Mi levedi,
To thee I cri:
For mi sinnis dred ham hi,
Wen hi thenke that hi sal bi,
That hi haf mis hi-don
In worde, in worke, in thoith foli.
Levedi, her mi bon.

Mi bon thu her,
Levedi der,
That hic aske wit reuful cher;
Thu len me her
Wil hic am fer.
Do penanz in mi praier;
Ne let me noth ler that thu ber
At min endin day.
The warlais, thai wil be her
Forto take thair pray.

"Moder, nu y may the seyn,
bettere is that ic one deye
than al man-kyn to helle go."
"Sune, y se thi bodi swngen,
thi brest, thin hond, thi fot thur-stungen --
no selli thou me be wo."

"Moder, if y dar the tellen,
yif y ne deye thu gost to helle;
hi thole this ded for thine sake."
"Sune, thu best me so minde,
with me nout; it is mi kinde
that y for the sorye make."

I must confess that I've never had enough difficulty with Middle English that I've had to take systematic notice of its grammar. I just read the stuff.