Damn. I spent far too long working on this idea and hypothetical future expansions and someone beat me to it.
I actually already made a system using rubydns, and piston api to do this, but your solution sounds like it would be more reliable.
I have the username steemdns and domain steemdns.com if they would be useful for this.

My expansions on the idea:

All subdomains should be mirrored with a suffix at steemdns.com (ie subdomain.ausbitbank.steem = subdomain.ausbitbank.steemdns.com

Optional extra information available via TXT records (eg dig Hive account@steemdns.com balance.ausbitbank.steem TXT)

I was really interested in the .sss TLD as well for a freeform domain system not associated directly with your steem username. A good chunk of time was spent pondering ways to stop someone registering all domains or squatting other peoples names - there has to be an interesting solution to this problem using the reputation/web-of-trust system within steemit.

I've been sick as a dog the last few days and haven't been able to focus properly.. If you're seriously wanting to look after this concept long term I'm happy to help + give domain etc

Yeah - I'm a little deflated/dissapointed but TBH money doesn't matter, a truly free alternative DNS system being available to the world is FAR more valuable to me :)