Ask HN: What do think of this idea? 17 years ago
I don't think it's domain squatting, because I can see the service you're selling is coming up with a good name, something I've struggled to do myself. Not everyone will see it that way, but that's ok because some will, as long as the website emphasises the creative aspect, searching by topic, etc. It's like paying a graphics artist to make graphics for your game instead of doing them yourself as they would have done in the old days.
But your payment structure makes it difficult. As much as I can agree it's something worth paying for, I would still want to get it for free if I could. Like ErrantX I would probably be tempted to just find a name on your site that I liked and use it as inspiration for another name that is still available.