I like the idea of dynamic name generation because it would make it much much easier to add nameplates - you only need one program - and reduce the amount of extra graphics required.
Ship names are one of those nice touches that aren't vital to the game, but help make the experience that much fuller. Texture replacement sounds all fine and good, but making a name tag for all the ships in a mission is probably not going to get done.
Not to mention the routines for writing text to a texture could be used for other things, e.g. a sign that provides game data. (Like, say, a scoreboard...) or used to prerender HUD text (If I understand correctly how the idea that was floating around to render parts of the hud to a texture would work.)
Finally, if a standardized name was used for the ship name plane, you could drop in any modern ship and immediately have a customized look. (When people talk about name plates for ships, they're usually thinking capital ships - how cool would it be to be able to have an individual nametag for fighters as well? Not likely at all with texture replacement.)
I think bumpmapping would be more useful than text-to-texture routines, but I think that levelmaking has been sorely disregarded, and it's coming around to stab the FS community in the back. The easier levels that look and play good are to make, the more there will be, and the more reason there'll be for people to get into Freespace.
