I believe this is very unintuitive so far.
AGREE.
This is very powerful, but also potentially very dangerous feature.
If we do not want to loose users because of their mistakes... and our bad design, we should improve User Experience of this feature first!
Agree to AGREE.
It is highly unintuitive and confusing to say the least. This easily leads to user frustration. We need to simplify the whole user experience.
Some suggestion:
1) Screen should clearly shows public and private accounts and a way to filter the two types.
2) Selecting a public address or a private account should be a one-click process. Remove the need to 'add contact'.
3) Have a Step-By-Step Wizard to guide users with clear simple explanations.