>>"I suppose there could be a five year transition period during which the old .net, .com, .org domains would be transitioned into country-based domains, and those names would eventually eliminated entirely."
I could see all kinds of issues where a 'legitimate' .com domain can't transition in to one (or more) appropriate local domains because they're already legitimately taken by other companies with the same basic domain name root, (such as one based on a common surname or company initials, or some other connection).
And I'd wonder what kinds of lawsuits might come from people who'd paid a fortune for some premium .com name, or spent a fortune building up a reputation around one that they'd bought if the name was going to be terminated simply in a supposed attempt to make it easier for some fraction or people to work out where a company does business.
Surely, some kind of meaningful site-related metadata standards that provided good company locality information (and maybe other useful information) to people who were interested would do rather more to help people find what they wanted than causing all manner of ructions in domain names.
There might be some possibility for abuse by people trying to push a crap site up search rankings, but it can't be beyond the wit of humankind to find a mechanism which overall is more useful than misleading.
>>"Then with the already-in-use smart searches and domain handling, if someone types in "McDonalds" then the most likely match would be the one on the street nearest you."
Which is rather making assumptions about what someone actually wants to find.
And even with country-based domains, it still requires a mechanism for finding the local store from all the ones in the country.
A mechanism which seems likely to work just as well even with the existing domain name system, whether it works by trawling through sites with or without metadata assistance, or by people who want to have one or more places findable registering the information in some web directory that makes searches easier.
Personally, if I was going to type in 'mcdonalds' and hit a 'find local' button, or type in 'luton mcdonalds', I'd quite like it to find McDonalds paint suppliers or McDonalds hairderessers at least as much as McDonalds 'restaurant', and that doesn't seem like something that can be much helped by domain name fiddling, even if they start getting very area-specific.