You are right in my opinion, which is why there is further development for namecoin to be done. I suspect the majority of the development will not take more than 6 to 9 months to get up to speed. Bitcoin has given namecoin a handicap in that much of the ideas and market and people are in places to make bitcoin and namecoin explode soon enough.
Maybe it's just me and my limited imagination but at this point I feel it's very unlikely for namecoin to work out as intended beyond use for a small group of people, namely geeks.
The way I see it, we'll need to convince ISPs to do extra work for no benefits to them (i.e. to their profits) in order for this to work. But if this requires ISP cooperation to work, then namecoin's strength as a resilient distributed DNS vanishes as it is reliant on ISPs cooperation. So any ISP (or the government of that country) can simply block off lookups to a particular domain say wikileaks.bit and render the service useless to the majority of their users who probably never heard of DNS, much less know/bother to get around such blocks.
There is one possible way namecoin could work out (and for that matter bitcoin could get boosted by the same), is the porn industry. After all, people are willing to pay money, install dubious dialers and whatever not to get their porn fix, they will probably be willing to do something that doesn't cost anything to get access to more porn, and pay for content with bitcoins so anybody looking at their CC bills won't be able tell
p.s. side note: dot-bit.org seems to be dead, not a good sign
There is no extra work for ISPs and it has nothing to do with their co-operation ... do you even know how DNS works?
From what you have written, seems clear that you haven't a clue how namecoin works.
