This is a fantastic idea, and I wish other services (I'm looking at you Twitter) would follow suit. Your Yahoo ID becomes a part of your identity when using their service, so it seems reasonable that people will feel happier and be more inclined to use Yahoo's stuff when they have an ID that they feel good about and aren't embarrassed to share with their friends.
I emailed Twitter four years ago with such a request, and got this response:
> Twitter is not currently releasing inactive user names. Unless your user name issue involves Terms of Service violations, you'll have to wait until all inactive user names are released. We're working on a better long term solution for this, and we should have more news soon.
Four years later, the username I want(ed) has had no more activity, and that "long term solution" is nowhere to be seen.
Weird. I could have sworn it was sometime within the past four years that I emailed Twitter asking for a username and they granted it to me pretty much instantly.
I went to sign up for Twitter and found that my usual username was taken by someone with exactly one tweet, from 4 years ago! It's definitely frustrating.