Unless I'm missing something, this makes about as much sense as a semi-circular ham sandwich.
Ok, I admit I watched Dragon's Den on TV last night so maybe my mindset is a little coloured, but how can a domain name black list (or grey list) be used to improve the internet? I just cannot see any way such a concept can be used universally without causing vastly more problems than it solves.
I think someone has spent too much time contemplating a problem from very very narrow perspective.
It would work much the same way as spam blacklisting with some domains and mailservers being blacklisted. Any DNS using a reputation service would then fail to resolve the domain for a user. Thus if all of a PPC parking company's domains were added to the blacklist, any direct navigation traffic to sites on the PPC company's nameservers would never reach it. Malware, scumware and phishing sites would similarly be added to the reputation based blacklists.
Surely, the correct response should be to officially rescind the domain names, otherwise, if a legit site is blocked in a region, how is the webmaster supposed to know? And if we are talking global rather than regional, surely some sort of accountability is required. Indeed, the same could be said of regional blocking.
Then there's net-neutrality to consider. And on top of that, a new pseudo http response code will need to be agreed so that browsers don't just timeout or whatever. Oh yes, and browsers will have to be updated to understand that code and we all know how slowly changes to IE take place.
This seems to be a plan to force some sort of half-baked firewall on users without permission. If users could opt-in individually it might be possible to make a convincing case provided the authority in charge has sufficient funds to cover compensation claims when they get it wrong, but that's never going to happen.