WoW made inactive character names available and gave the inactive character a free name change in case the player ever returned. I think that's a fair policy when you have a multi million sized player base and no surnames available. I don't think it's needed in FFXIV though because the amount of sensible first name / last name combos is more than enough for this size a player base.

Deleting characters to free a name is a clumsy solution though. C'mon.