In the past Apple has gained some experience in internationizing its products. And the outlined solution (minus the default or missing options) is quite good, too.
But I doubt if they tested the device with real people in the local markets. For example, as a German using mostly German Websites I would have stronlgy preferred the .de default.
But usability engineering, esp. for international target markets, usually requires more time and money than usual. And I guess, that is where Apple took the shortcut.
thanks for the update on the development in China. I am an eager reader of your blog and wanted to stop lurking and to start contributing.
Captured brand names can become a serious problem. I have identfied Gerry Webber (a German fashion brand) as a case. If they wanted to expand into the Chinese market they will find the URL already occupied by some Singapore company.
With the introduction of Internationalized Domain Names the problem might get worse. Companies have to patrol ever more domains ... You already identified Campbell soups as a brand which uses localized brand names, e.g. Russian.