This function was on at the very start of PWI, but later was discarded because they faced problems such as synchronizing name changing and blacklists/friendlists and such. I think they stopped using it on 4th or 5th week after release. There yet is a chance that this function will come back sometime in future, but, If I were you, I wouldn't bet my money on that.
Completly Correct. It was disregarded only 6 weeks in. When a player joined a fac, it said 'XXX has joined' rather then their new named, it showed their old names. Also on peoples friends lists, it said (examples) 'Jack' is online, when there new char name was 'Fred' Since the person was origionally added with the first name, they remain on fl with that name which could lead to some confusion. and yes as he said above, players would change names to get past black list.