I agree with pretty much everything you said, except the conclusion. For DNS, we don't need distributed consensus, we have ICANN and that seems to work pretty well. We'd only need a blockchain if we needed to replace ICANN for some reason.

So assuming ICANN exists, you only need to trust registrars, which are regulate both by ICANN and whatever municipality they operate in.

Building a separate system to ICANN may be desirable in an abstract sense (ICANN kinda sucks in some ways), but it's a bit too disruptive for too little gain since it would force everyone to go repurchase domains, leading to mismatches with the current system, causing confusion and enabling fraud. That's a pretty high cost for minimal gain.

In other words, just because we can doesn't mean we should. And this is coming from someone who is interested in crypto (mostly Monero) and distributed computing in general.