Lots of common TLDs already range 5-15 USD/year where I'm at, not sure why that's a problem tbh. For normal users with one-N domains that seems like reasonable pricing.

>Domain squatting would have to be managed somehow.

There's a bunch of free TLDs out there (e.g. dot.tk). While they were more popular years back domain squatting, at least from my experience back then, was the least of their problems. The amount of malware and generally illegal content spread through these made them really unattractive.