I think the best solution to this is to not tie character identity to their names. If you look on the lodestone, your character url is tied to a number. If character ID in game referenced this numbers, then we could have duplicate names.

Players definitely shouldn't lose names that they give their characters. If it's easy to refer to character ID's instead of names, I think it should be implemented. The only issue that I see is how to integrate this with the UI. Tells might go from /tell Player Name to /tell 123456, but that's less intuitive. If characters that are offline, far away, not friended, etc are filtered out, then we might be able to keep referencing names while using a filter of some sort.