If I understand rightly, the AV system being discussed in the UK allows the voter to choose to vote for either one or a limited number of candidates.

All votes won't be carried to the final round so this means the winner isn't guaranteed a 50+% share of the vote.

People don't have to fill in all candidates, so some votes may be lost along the way. The winner is guaranteed a 50% vote share of all votes that make it to the final round - and nobody is denied a chance of getting their vote there.

Its guaranteed that 50% to either prefer the winning candidate to the other electable candidates or have not expressed a preference.

This is very true, but the original point still applies.

This sums it up for me: http://i.imgur.com/nDLIP.jpg

If you want to be pernickety, 'alternative vote' is also a misnomer: the word 'alternative' comes from the Latin 'alter', which means 'the other of two [options]'. There are more than two voting systems, so AV is incorrect as a name, at least to traditionalists.

But this really doesn't have any bearing on which, if any, someone in Britain ought to vote for. That the name doesn't really fit doesn't say much at all about the merits of the system itself.