Don't worry - Blender's working just fine :)
The Render View algorithm is set at a low quality value for performance reasons, so you can manipulate the view of the model in real time with approximate ray-trace lighting conditions including reflections, transmissions, transparency, etc. It's not meant to give you an excellent result, just a guide result. If you want an excellent result, F12 :)
Material view only takes into account diffusion and light - no reflections, transmissions - so it's even quicker to calculate. There are no calculations done to approximate reflections or caustics, which is what's 'fogging up' your Render View.
Blender Render (otherwise known as 'Blender Internal' or 'BI') is supported, but no longer developed. Everyone's moving to the Cycles render engine (or other third party alternatives). Among many other features Cycles includes flexibility in setting both Preview and Final render settings independently. This means you can increase your Render View quality quite a bit... at the expense of view-handling performance.
As an aside... for a tiled pattern that's one helluva huge bmp you're using :) Think about using a smaller tile that just captures one iteration of the pattern: then in the Texture > Image Mapping panel, set it to Repeat and increase the X and Y values until you're happy.