There are several bad things about the ability for users to create gTLDs. As specified earlier, no one will be able to recognize them (for example, http://mustang.cars.ford/ would this throw you off?).

Some other overlooked problems are:
a. The internet would become further disorganized. It's already plenty disorganized, but at least the majority of web sites out there are under the .com, .org, or .net gTLDs. Taking this away would only increase said disorganization.
b. .com would be rendered obsolete, given a couple of years (possibly 10-20), and everyone who spent $10/year for their own .com domain would soon move to another gTLD that offers cheaper registration. This is a positive feedback sure to end in collapse; as competition over domain registration increases, profit margins for domain registration/gTLD maintenance companies decreases, resulting in a bubble sure to burst.
c. Lastly, no mention is made as to who would be maintaining the new gTLDs, so I'm assuming that maintenance is left in the hands of the companies buying the gTLDs. This could mean that the quality of the DNS registries and root nameservers for TLDs would decrease. This is really bad, because currently, it's these DNS registries and the 13 root nameservers located around the world that control the internet.

Thus, I side with the government on this one; ICANN is just looking for ways to make more money.

You are absolutely right. Here's the problem:

Getting execs of any sort to change their business model is one of the hardest things to do in any business. For the most part, you have to replace the execs to get the business to change. For example, Microsoft is finally beginning to change their business model, right after Gates left. Apple changed their business model when they brought Jobs back in. Warner Music (as well as the rest of the labels that the RIAA represents) has yet to change its business model, and it may take some time, and some board replacements, to get the change to happen.

Could you use a UK-based proxy and download the player?

Um, for years, haven't we known that the earth's magnetosphere was missing near the poles? (the Aurora Borealis, anyone?)

Your last few arguments are valid, but with the right monitoring software, you CAN lock a system down. It starts at the BIOS level. If the system admin sees that one of the computers is doing something that it shouldn't be doing, then the admin can lock the BIOS, preventing the computer from booting.

You know, if the sys admins are smart, they'd lock the computer down from the BIOS level, preventing any use of the computer. This would also prevent losing control of the computer when performing a clean install or swapping out the hard drive.

Also, if you do guard the BIOS and the disk select utility (they are macs, after all), you can't boot from an external DVD.

I'm sure that, because the laptop would not belong to the student, but rather the school district (until graduation), any attempts at booting from another device can be blocked, and any attempts at repartitioning the HD or wiping out the partition can also be blocked. After all, they're Macs... the disk utility app can easily be blocked, as well as the disk select utility that allows you to choose the bootable disk. This would prevent people from booting from any OSX install disk, or installing any other OS. As for the antipathy, don't they already get that from the school's library computers?

Four letters: CIPA. From the FCC site:

I don't think that it really matters that they defeat the filters, because any action taken afterward is the responsibility of the user, and not of the school board. However, if you just allow them unrestricted access, then all liability falls on the school board, which could cost them a lot.