That seems like it would only further incentivize a problem we have today - wastefully holding a bunch of IPV4 addresses that you have no need for.

IMO the .com domain name fees are… acceptable. It’s similar to how we deal with scarce resources in almost every other domain. The only real improvement I can think of would be some sort of LVT-like-system where high-value domains (dictionary words, short domains) would cost more than low-value ones (robertospizzaottawa.com) to discourage camping.

Ok, then we would have to buy an IP address instead of a DNS address. How is that better?

That was not a hard and fast “rule” in 1994 in that you could host multiple domains on a single IP for email purposes. You could also point an arbitrary number of domains/host records to an http server with a single IP, you just couldn’t serve differentiated content per domain/host record.