Tom,

Your post got cut off, so I'm guessing that you had some larger argument.

I'll respond briefly to the first point.  I agree that strong protections are
essential, especially in cases where entrepreneurs are building their brand
around a domain name.

I still have to do some research on this, but I was thinking about how the FCC
requires that spectrum license-holders "serve the public good".  We'd adopt
something similar.  We're different because:
1. We'd use the democratic intervention of New Yorkers to give the policy some
teeth
2. We'd probably see more concern with social justice infractions, rather than
indecency infractions

That said, we can't have the mob able to revoke a license at every turn. 
First, it's important to have graduated sanctions, so that name holders can be
pushed towards better practice.  Second, this is why Alex's "checks and
balances" governance model makes so much sense.  The BoD would, for example,
have to approve all referenda on revoking licenses.

New question then...

Why would any entrepreneur choose to navigate this minefield?

Because having a .nyc name is like a badge of honor.  You have the trust of
the New York community.  

Again, it comes back needing a high level of involvement from the community. 
Will people actually care about voting on this stuff?

Matt