Let's assume that you're not using Google's recursive DNS server (because you're obviously and rightfully afraid of them). Instead, say, you're using OpenDNS.
You want to go to www.google.com, but you need to resolve the domain name. You're request goes to OpenDNS. They get to see your IP. They always have. Then OpenDNS goes to google' authoritative DNS server to figure out the IP for their webserver. Under the proposal, the authoritative server would get to see some of your IP address, so okay, Google knows where you are, omg. But then you get the DNS query back and your web browser shows the Google homepage. OMG, their webserver just got your IP address again! So Google would know your full IP address anyways.
On the other hand you may want to go to www.cnn.com. Again OpenDNS gets your query and your IP. Under the proposal, the cnn.com nameserver would get to see some of your IP address when answering OpenDNS's query. But then again, cnn.com would get your full IP address later when you actually go to the site. ****And Google Would Know Nothing Of Your Visit To CNN, Even Under This Proposal**** baring CNN using Google analytics on their webpage, which they very well might, but this proposal has nothing to do with that.