I wonder why couldn't Verisign just grant most people the second level domains here. I imagine there aren't too many people holding onto 3rd level .name domains here and the set of people holding onto 3rd level domains that share a second level domain with someone else is probably very small, a few hundred at most.

For all the ones holding exclusive second level domains, just give them the second level domain. For all the ones holding shared second levels, offer a buyout and/or allow parties to negotiate with each other on a shared ownership structure of the second level.