I learn so much here that I want to share with you something that could be interesting. Also, this give me the chance to see other opinions. I have used a free Romanian hosting that gives subdomains "yourname.xt.ro" (I’ve changed their name) and I have used my targeted keywords in that subdomains names. As I see, google thinks that this xt.ro isn't a domain but more like a "com.ro" or "co.uk". I was amazed to see how easy was to be in top 3 for almost all my subdomains. I know that really isn't the same magnitude SEO battle in Romania like in US, but I think this could be scalable. The clear advantage for SEO of having a 2 letter domain in countries that this is still an option is that you get as many subdomains as you want and you can make sites that have an advantage in google. In my case, I had classifieds sites and since people search for ads from their cities, I've made lots of subdomains like "RealestateYourCity". I know that you are going to say that the domain name isn't anymore a big deal for google, but combined with all the other SEO is a plus. I know this trick wouldn't work for most of you, but for those who target to steel a niche from a market dominated in google by big, general sites... this might help.
The hosting company is about 1 year old. DangerMouse, perhaps you're right, but there are so many countries with their own rules. We have in Romania top level domains like <name>.arts.ro, <name>.firm.ro, <name>.store.ro, <name>.www.ro God knous what is in Aruba or Marocco.... On the other hand, Microsoft seems not to know this, too. Had you ever tried in Internet Explorer to put on "Restricted sites" something like "*.qw.ro"? It doesn't allow it. It allows you to block one domain qw.ro or subdomains *.qwk.ro, but not *.qw.ro