Frontend websites/dapps can choose not to display such names. Looks like Rarible already has delisted it for example. ENS Labs, ENS.Vision, and others could do the same thing for their ENS manager apps if they wanted to.
But the core protocol should never have any kind of disallowlist like that. It should be completely neutral.
Also, once somebody owns a name, nobody in the entire world (no, not even the DAO) can forcefully take that name away. It’s simply not possible at the protocol layer – the eth node is completely locked, and there are zero administrative controls on the .eth Registrar that would allow names to be transferred without owner consent. Not to mention that would be against the first article in the ENS DAO Constitution.
The most that the DAO could ever do for existing names is disallow them to be renewed or set very high renewal costs, via a new ETHRegistrarController. But that would be telegraphed well in advance, and any holders of existing names would be able to extend their names for 1000 years or whatever at current registration fees, before that could go into effect.
So for this particular name you linked, if anyone was thinking of forcefully transferring/burning it from the current owner, then sorry, it cannot be done. (As long as the owner keeps the name expiry extended.)
Of course I can tell you already knew all of the above, because you make the distinction between not-yet-registered and already-registered names.
Now, perhaps the DAO could vote to purchase/register such names and burn them, as they see fit. Either by purchasing them from a marketplace, or registering expired names that are in the temporary premium auction phase. This is something that has been discussed before, with the “ENS Fairy” thing that caused an uproar a little while ago.
Essentially the DAO votes to give funding to the Ecosystem Working Group. Then the stewards of that working group (three people) have the power to use that funding to purchase/register names and give them to ENS Fairy (controlled by two people from ENS Labs). Any funds that get used on the temporary premium auction flow right back into the DAO treasury.
The intent is to grow ENS adoption, by securing names for influential brands and giving it to them in the future when they’re ready. But it could also be used to register-and-burn such “unsavory” names as well.
Whether that should be done is another discussion we can have. I don’t think it’s a good use of DAO resources personally. And I’d prefer to see ENS remain as credibly neutral as possible.