One does not need to interpret the covenants allegorically to accept covenant theology.
Instead, I see the factual progression of the covenants under the umbrella of God always saving by grace alone.
Dispensationalism (I was a dispensationalist for much of my life) tries to chop up God's redemptive work into parts and then claim that God changes his methods over time. This claim is not well founded in the Bible. It also forces a break and misunderstanding about the day of the Lord.
Are we talking about the same thing? The "covenants" of covenant theology are not the covenants outlined in the OT: Abrahamic, Noaic, Mosaic, etc., whereas CT is based on presumed covenants of works and grace, and sometimes a third one, the covenant of redemption. The Biblical covenants are not the backbone of CT.
Concerning your description of dispensationalism, that's not what I teach. In dispensationalism, God does not "chop up God's redemption into parts." Rather, I teach that dispensationalism describes salvation history. Again, I have never thought that "God changes his methods over time." Is it possible that you abandoned dispensationalism because you didn't understand it? (Just suggesting.)
Dispensationalism is only about 150 years old and is particular to North American Arminian-based theologians. As I study the Bible, with the full picture in mind, I step farther and farther away from dispensationalism. What I find is that for many it is a means of establishing a legalism and a control over life where they remain entrenched on the throne of their life. When I see the progression of God in bringing the Promised Redeemer to man, I see the beautiful flow of his covenants with man. None of it is allegorized. All of it points us very clearly to Jesus.
I see no connection between dispensationalism and the Cal/Arm debate. In fact, on the dispensational side you have no less than men like Lewis Sperry Chafer (4 point), John MacArthur (5 point), and the entire faculty of Detroit Baptist Theological Seminary. I also fail to see the connection between "150 years old" and anything else. Theology should not be delineated by its age, or we'd all be locked into the faulty theology of the "Didache."
As for the rest of your post, I'm mystified. Dispensationalism as legalism? "Entrenched on the throne of their life"? This further convinces me that you don't understand genuine dispensationalism. Have you ever read Ryrie's
Dispensationalism?