I was just chatting with the main developer, cjd, in his IRC channel and I introduced him to this thread. He is very familiar with bitcoin and namecoin but his biggest concern is that there would be even less incentive to produce websites in an experimental network if people had to pay for domain names. But he believes he came up with a solution:

00:51   cjd   I have a solution to making domains effectively free w/o risk of long forks
00:52   cjd   a fork can be resolved by merging domains in the fork with domains in the main chain
00:53   cjd   and the root of the domain chain must be in a bitcoin transaction hash
00:53   cjd   but until it gest big, no money need be wasted
00:53   cjd   so the only cost is the fee
01:03   cjd   well, you can tell the dianna devs about this channel since I have a few questions for them and I imagine they have a few problems which I have possible solutions for.
01:03   cjd   I have been working on this problem for almost a year.
01:04   cjd   cjdns, in it's current form, is a routing engine.
01:04   cjd   It solves a number of problems with routing protocols but it does not approach naming.

This stuff is over my head so I can't have a real conversation about it but you can reach him here: https://wiki.projectmeshnet.org/IRC