Homographs are a classical example of a PR attack. It's a complete non-issue.
I am inclined to agree.
But since the TLD registry operators can, and do, control the delegation of their TLDs, they have de-facto control over the sets of labels that can be used for second-level domain labels that are publically visible within their TLD domains
Indeed. The actual problem is that ICANN has been captured by the trademark community (WIPO, basically) and has internalized two bad ideas, that domains are like trademarks, and it is ICANN's job to protect them. Once the registrars and registries realized that this meant a thousand first-day registrations in a new domain (you may be sure that disney.xxx has been presold), there hasn't been any serious opposition so there are continuing inane arguments about how to prevent 2LD homographs, even as everyone agrees that it's impossible. Mozilla's approach strikes me as the least bad way to appease the trademark crazies without interfering too badly with useful work. I will be interested to see what they do when a cctld declares that their policy is that they permit any name. R's, John