This project is only after one namespace: Domains. The fact that there are many TLDs is an artifact of how traditional DNS works. When have you ever actually thought of "ah yes, xxx.org and xxx.com are two totally independent places on the internet"? The only times people use anything other than ".com" is to avoid a squatter or to use a clever pun ("invict.us hurr hurr")
Namecoin's "all namespaces on one blockchain" approach isn't right. This is because each namespace has different supply/demand characteristics. BTS DNS should only be used for resolving names to IP addresses.
No, there are valid reasons to use other TLDs. Yes, I think of the .org and .com as (usually) being two totally different organizations, although some companies may set up their own nonprofits and give the nonprofit a .org domain name. Of course, this may have to do with my being involved in web development and domain names for over a decade now, but yes, I always think that, although I recognize that the general public might not.
"Squatter" isn't always the best way to look at things. Sometimes there might be namespace collisions between perfectly valid entities that have no problem with each other in the real world, but in the limited space of a particular TLD, they do have a problem.
To give an example, there is AAPL, American Academy of Psychiatry and the Law. There is AAPL, American Association of Petroleum Landmen. There is AAPL, American Association of Private Lenders. There is AAPL, American Artists Professional League. There is AAPL, the Apple stock ticker on the NASDAQ. Most of these could have valid claims to AAPL.org, while any of them could reasonably claim AAPL.com.
The fact that independent, non-infringing companies/names can exist in different locales/businesses in real life, but come into conflict in the DNS namespace (or similarly exclusive namespaces such as nationally recognized trademarks), is not a new idea. See the Apple (Computer) vs. Apple (Corps) issue from back when Apple first started selling music in iTunes.