Sorry, but Namecoin is a scamcoin! DNS works on low-end computers, Namecoin is an overkill requiring vast storage and constant syncing - you can recall what happened a month ago when Coinbase went out of sync with the blockchain and were pretty much offline of hours. Using the blockchain for absolutely everything is an abuse! DNSSEC + DNSCrypt are pretty fine for me! Plus, being a scamcoin makes .bit domains pretty expensive - right now it's $14/yeah - way more than a way more useful .com!

I think that's unfeasible. Namecoin requires everyone to have a copy of all domain names AFAIK. It will just grow to the point of being useless if it becomes popular. If it becomes too big, you have to trust a small number of nodes to run a full instance and give you correct results. That's about as good as the current PKI/DNS system anyway.

Even if you do have to use a server, it's a lot better to be able to choose to trust anyone with a terabyte hard disk (with about 150 million current domains according to whois.sc, that sounds like enough even if it gets very popular) to not return incorrect data for a fundamentally decentralized store than to trust each of a large group of entities (CAs) to uphold a system whose canonical source (DNS) is subject to censorship anyway.

There are Bitcoin wallet implementations that don't require the full block chain. I suspect a lightweight version of Namecoin is also possible.