So if you start from the premise that NSI has described a real problem, in which registrar queries to the registry are sniffed and sold by the registries themselves, is there a better way to solve the problem than with what NSI has done? I think so.

To stop the sniffing, you'd do the first availability lookup in your own walled garden. I expect many registrars already are getting daily dumps of the TLD zone files. You'd simply take the zone file data, which is always less than 24 hours old, and do your first lookup against your own database. This is going to give you an answer on the name's availability that is 99.9% accurate. This ensures that no queries are passed to the registry. When you have the result, tell the registrant that the name is likely available and that you'll do one final lookup after the credit card information is submitted. Then, simply go to the registry when you're sure the customer is ready to purchase the name. Seems simple enough. What am I missing?

ADD: Here's an even better mousetrap, courtesy of John Levine, writing on the At Large mailing list: "I entirely agree that NSI's four-day hold is anticompetitive, particularly in view of their above-market prices. But what if they held it for four minutes? I still think that the world would be better with no AGP at all, but it seems one could make a plausible argument for holding a domain for the length of time it takes to run a shopping cart through a checkout."