1) I understand that taking a domain name doesn't shut down the operation, but having a domain name at least makes it easier for the content to be accessed, and easier for it to be profitable for the wrongdoer, who can change hosts, etc, and just update the IP behind the domain.

2) Maybe you misunderstood what I meant by my post.

The point of my post was, why on earth would anyone want the main block chain of a new currency to be wrapped up in a decentralized DNS system that will tend to skew towards illegal (or at least *fringe*) activity? That isn't going to increase adoption.

Im aware that saying "its against the protocol" disallows anyone from taking a domain, but that is the point. Why would Bitcoin want to be a part of a DNS system anyway?