Just a note: Those .bit domains are Namecoin domains. You will need to install a plugin for your browser (either Firefox or Chrome) for it to resolve .bit domains. Your site visitors will also need to do the same.

.bit domains can actually be registered for much cheaper than $1. However, the process for doing so is very complicated and involves downloading a copy of namecoind or Namecoin-Qt and the NMC blockchain. Namecoin is pretty cheap right now and 1 NMC can pay the registration fees for many domains. Unfortunately, it also means that many domains in the .bit namespace are already taken.