Your plan seems reasonable.

I think step 1 introduces a slight weakness in that clients will now 
accept more host certificates than they previously did.

> 3) make step 2) optionally through a config parameter such that those 
> that do not want to rely on insecure-dns at all can turn it off.

I think that eventually the default for this should change so that DNS is 
not used (perhaps preceeded by several years of outputting a warning that 
insecure DNS lookup is being performed).

Another thing I find equally unpleasant about host certificates in the 
presence of multiple CAs (which is the case in all but the most trivial 
deployments) is that any CA may issue a host certificate for any host; and 
so (to a first approximation) any person may acquire a host certificate 
for any host name whatsoever, which can then be combined with a spoof of 
the forward lookup DNS.

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