That was already warned about when you first download Alpha 0.0.4 full install...
But I've tested that too just to see how messed up it was. It was more like a second set of character select. Why? Because we're able to create a new character in that set and level them like normal... Then when you logout, you'll be at your first original set.
I didn't lose anything when I tested, my first character was still there with all his levels / skills / items / money.