Worse: if Njalla decides you shouldn't have a domain - for any reason whatsoever, including "we don't like your web site" - they can seize it, and you have no legal recourse.

This is not a hypothetical, by the way.

That's the nature of 'private' domain registration used more commonly, at least to some degree for many private registrations. If you read the agreement, you are transferring your domain registration to the privacy service, and they forward stuff to you. I don't know what happens if they disappear, however.

It'll be a pick one problem (secrecy, control) until say the big browsers support .bit domains directly doing a lookup on the block chain.