Bingo. The VF-0, like its decendents, are all-environment. However, the limitation on the VF-0 is it's engines. It's engines are conventional jet engines. Conventional engines don't work in space, at least not for long, i.e. they would be used as rocket engines. Since VF-0s already consume fuel in large quantities, in space, you would not last long.
It only looks more advance because this was done after the original series. And IIRC, Mr. Kawamori has commented in the DVD liner notes that prototypes look different when they get to the mass production stage. Look at the YF-22 vs. the F/A-22. The basic design is the same yet there are changes.