Does this mean that initial fraudulent registrants of generic names will get to keep them...

Some have covered that angle and got trademarks on sex et cetera, and no doubt more will do so on good generic names in advance of future TLDs. The trademark protection folks tried to control the namespace, so some speculators are using their own trademark process against them and have just moved up a level to become trademark squatters. How they'll be removed from there is anyone's guess. You can presumably get a trademark for sex with regards to a brand of table or boat or lightbulb through the USPTO, and there are probably quite a few non-US trademark offices with lower standards. The trademark lobby should have left well enough alone. Sue those who are clearly infringing, sue them large and make an example of them, and leave everyone else alone. Instead they try to extend trademark protection to where it doesn't fit and wind up making it a bigger mess. -g