I really like this system, however ZOS really needs to learn from previous uses of it and add to it instead of going backwards.
For the security conscious, showing a Username can be a nono, a separate @name (one you would also see on the forums instead of a username) can take care of this. So you might login as Jojorox, but people will see you as @Superjohnny.
Such a system should allow for multiple same character names. In the real world there's plenty of John Smiths, with this system you can accomplish the same thing with John Smith@Superjohnny and John Smith@RocksRCool. This eliminates the rush to hoard character names and has worked quite well in games that have used it.
RPers should have the ability to toggle whether they want to see other peoples @names or not since it can annoy some of us.
There should be an appear offline mode, perhaps with a secondary @name just in case you come across the very people you want to avoid.
I do believe Cryptic actually uses a separate username/@name system now, if you don't have it you should be able to contact their support to get your @name changed.