I think what's missing is that squatters and other bad actors are going to attack the distributed name system, too. It should be somehow resilient, and ideally resistant, against deliberate misuse by powerful parties. For instance, DoS attacks that pollute the namespace and could make the distributed naming service too slow or resource-intensive will necessarily be mounted.

This is one place where a significant proof of work, along the lines of Namecoin or handshake.org, would make sense. (Another place is password hashing, for example.)