Does this mean that a single organisation would:
- issue address space;
- investigate reports of its misuse ('misuse' to be defined);
- judge what action should be taken if misuse is proved;
- and finally, enforce that action?
Yes, just as an ISP issues a userid to a customer, and withdraws
it if the customer abuses his service
Is this legal? In any country?
Sure. Nothing makes it illegal.
Off the top of my head, it would appear to breach the Competition Act
and the Restrictive Trade Practices Act.