I've been in a campaign where something like this has happened. A friend of mine named his wizard Yodaddy, which was later changed to Eodidi so that we would regard him somewhat seriously.
I'm an avatar on a fantasy MUD, and so I use the same rules to create my character's names for DnD that I use to rate the names of new characters on the MUD. Maybe these rules could help you figure out some basic guidelines for name rules in your campaign.
* First, the best names are medieval sounding or otherwise similar to a
fantasy setting.
* Second, names must be names. (Slasher, Mauler, Bashur, these aren't names)
* Nicknames are unlikely to be accepted. (ie Slim, Baldy, Skippy)
* Please use common sense when creating names.
The basic guidelines for unacceptable names are:
* Main characters largely identified with a specific well-known book, movie,
cartoon, comic, anime or other media. (Bilbo, Akira, Mojo Jojo)
* Titles may not be included in names (Sir Peabody, Queen Ann)
* Names that are vulgar or offensive (you get the idea)
* Names or attributes of deities, angels, demons, or any other major figures
in world religions (Jesus, Satan, Beelzebub, Buddha)
* Bastardizations of any of the above (Billbo, Sirknight, Mi-lafs)
Hope this helps.