Seems like New Zealand have got the right idea with this approach.
As a New Zealander, I find this rather interesting. I wonder what they mean by the phrase "monitor any use of bitcoin"? It seems that they want to make sure that people who receive bitcoins in exchange for goods and services pay tax on their bitcoin income, but I'm not sure how this would be enforced. Surely they aren't planning on hiring people to sift through the blockchain?
Like you said it just means they'll be watching to make sure it's used legitimately and not for nefarious purposes or money laundering etc. They'll just tax it when people exchange it for fiat and want their capital gains cut. I very much doubt anyone will be 'sifting through the blockchain', but it could be used to snare someone in the future if they're not careful.