I say auction them off to the highest bidder where there are multiple claims to the same generic word. At least that way all thieves have to pay in full to play.
Even better: Let the central registry keep the generic, high PPC value words and put up PPC landers on the domains. That way the registry can pay its operating costs from the revenue and lower the cost for the remaining registrations.
Seems like a fair resolution to an ugly situation to me.
I saw a few very dodgy .info registrations, one of which was a web hosting one with a claimed trademark of 1984 - a trademark registration that was extraordinarily prescient considering that the web as such did not really exist until the early 1990s.
There should be a penalty for fraudulent applications in that if one demonstrably fraudulent application is submitted, then all registrations by the same applicant should immediately be deleted. It is the kind of brute force logic that works well on databases.
Regards...jmcc