The idea to use the top level was rejected, thankfully. I like the way the domains are categorised, so you can tell when something is a school, government, etc. It gives domains a certain level of assurance and authority.
It's just a matter of reserving those domains.
It's still on their homepage (pink "Consultation" box) and the wording is "revised proposals". Worryingly they're also looking at introducing residency checks for individual registrations.