The salt won't protect against poor passwords (common passwords and dictionary words) but it will help relatively good passwords stay secure in the face of ever-expanding collections of rainbow tables. For example there is a 5GB table currently available from freerainbowtables.com that allows you to look up the plain text for any MD5 hash of a string up to 6 characters, including a relatively good password like "F8% z5". Eventually they will expand to 7 characters, then 8... Adding salt makes a rainbow table attack much less practical. I would expect that even a 16-bit random salt would require a rainbow table to be 65,000 times as large.

If you don't want to give your customers a heart attack: add plenty of salt.

I like the auction idea. Not all TLD's are of equal value. Perhaps instead of a fixed price there should be a fixed minimum bid to cover costs and an auction of, say, 90 days to see who is willing to pay the most for the rights to control the new TLD. That should bring in enough revenue that the minimum bid could be brought down to a range that some smaller organizations could afford, like $1000.

Perhaps there should be an annual maintenance fee. How about 1% of the purchase price? If the fee is not paid the domain is re-auctioned to a new owner. I foresee problems with the new owner raising rates on sub-domain owners, either to milk them or to drive them away so the sub-domains can be re-sold... Not sure if/how I would propose controlling that.