The license says you, as a redistributor, can follow the terms of GPLv2, GPLv3, GPLv(n+1). That is not the same as saying you can relicense it to any future version of the GPL. Every recipient will always have the choice of GPLv2.
The original source code will of course remain available under GPLv2. For the modified version, it can absolutely be modified and distributed under a later version of the license because that's exactly what the license says.
I'll edit out some distracting words and see if that helps clarify:
> you can redistribute...and...modify it under the terms of the GNU General Public License...either version 2...or...any later version.
So this means I can redistribute and modify it under the terms of GPLv3, which is exactly what this project does.
Some people do have a problem with this, as you seem to, and that's the reason very notable projects, like the Linux kernel, often edit out the part of the license that allows you to distribute it under later versions, and instead mandate GPLv2, even for derivative works.
Don't read the readme to figure out what the license says. Read the license: the readme only tells you what license. It doesn't tell you the terms of that license.
The actual license used explicitly allows later versions of the GPL to be specified in place of GPLv2.
> Each version is given a distinguishing version number. If the Program
specifies a version number of this License which applies to it and "any
later version", you have the option of following the terms and conditions
either of that version or of any later version published by the Free
Software Foundation. If the Program does not specify a version number of
this License, you may choose any version ever published by the Free Software
Foundation.
> I dont see why people would have any GPLv2 rights for this version.
Because the code is licensed under GPL v2. Not or any later versions. In the original distribution there was a filed called LICENSE.txt which is just the literal GPL v2.0 text, which includes the text of the license as well as the explanatory text and instructions on how to apply it. There is a README.txt which includes the line "Licensed under the GNU General Public License 2.0." And then every source code file says:
// This source is available for distribution and/or modification
// only under the terms of the DOOM Source Code License as
// published by id Software. All rights reserved.
