Well, Mike's a very smart guy, and an expert in security, so I may not understand his proposal with precision, but I'm pretty sure the outrage on this thread is a result of people just flying off the handle for no good reason. To be very clear, he's calling it a red list specifically because it's not the same as a blacklist. He's not proposing auto-filtering out 'tainted' coins. Here's the short summary:

"Consider an output that is involved with some kind of crime, like a theft or extortion. A "redlist" is an automatically maintained list of outputs derived from that output, along with some description of why the coins are being tracked. When you receive funds that inherit the redlisting, your wallet client would highlight this in the user interface. Some basic information about why the coins are on the redlist would be presented. You can still spend or use these coins as normal, the highlight is only informational. To clear it, you can contact the operator of the list and say, hello, here I am, I am innocent and if anyone wants to follow up and talk to me, here's how. Then the outputs are unmarked from that point onwards. For instance, this process could be automated and also built into the wallet."

This is basically a reputation service. There could be many of them, though it's a network on top of a network, so I'd have to imagine the network effect is pretty huge in terms of winner-takes-all.