No. It's not a disaster. Just the end of the .com/.net/.org era. As soon as people realize that .com/.net/.org are not neutral, but under US jurisdication, they will move to other TLDs operated in countries with more liberal laws.
Nobody wants to do this, though, as it would destroy the fabric of the internet as we know it or something. But a simpler method would just incur more government push back in an arms race around censorship. Do what the chinese [citizens] do: go covert.
But outside of which country? You'd have to read the local news for every country in the world that currently has them, every day, if not hourly.
What happens if people start selectively paying attention to the ICANN root servers? For instance, my computer is set to use google's DNS. What happens if the DNS admins at google decide that they're going to just ignore the update from ICANN?
And what happens if there is a second-tier DNS that crops up specifically to thwart attempts at messing around with the records? (Honestly, domains being 'seized' should be treated like faulty equipment. If a drive starts bailing out, you replace it. To me, it sounds like the US gov't's ability to modify the DNS at their will is a click-of-death on the DNS)
[1] http://dot-p2p.org/ [2] http://en.wikipedia.org/wiki/AlterNIC
Potential legal issues aside, what you end up with is a New Internet. Of course routes all remain the same, but nobody refers to addresses or routes: they use host names. Thus you run a huge risk of networked applications just not working, which would affect everything from entertainment to commerce to government services and god knows what else (what if medical devices in hospitals needed to retrieve a firmware upgrade and couldn't connect to the right host?).
In practice there would be no technical hurdle to do this. It's simple to just configure your domain name server to include some records, leave out some records and change others. Some people do this if their ISP redirects failed lookups to some advertising-laden homepage, for example. But on a large scale, the modification of the naming system to one's personal tastes has broad-reaching negative consequences related to availability of hosts and the functional and legal consequences therein. On a personal scale (modifying only your own name server results), you get to connect to your poker site again. I prefer the latter solution. If operating systems just started including a simple GUI to modify their personal domain name caches we probably wouldn't need an alternate dns root.