NIP-02 is overly simplified and promotes bad UX. The Petname system by Stiegler discounts entirely what the referenced entity is offering as their given or preferred name.

The primary thing correct in NIP 02 about this topic is that a petname is a label assigned by the entity who is maintaining their private list. Its the nickname hierarchical format which is kind of bogus.

Nostr clients would ideally support petnames for all manner of lists, whether its about a pubkey (like a contact, address book), notes (e.g. labeled bookmarks).

Trying to construct local petnames (even as a default) from other peoples follow lists would need to imply some kind of order which could only be guaranteed if adhereing to chronological order of entries in main follow list. 

Furthermore, its absolutely essential that petnames can be private to the user. If leaving the device, it should be encrypted such that only the assigner can read it.

As a user, in an ideal client Id be able to 

- assign any pubkey a petname/label that is private to me
- privately bookmark a note, and give it a personally meaningful petname/label that only i see
- see my designated petname/label by default in place of name or display name attributed by the pubkey in kind 0
- locally search my private bookmarks, list of pubkeys by petnames/labels i assign
- visually identify (by a glyph), those pubkeys and notes for which ive assigned a petname/label
- toggle a setting in my client to disallow or prompt confirmation of screenshots when a private petname/label is in view
- toggle a setting to show my private petnames/labels, or use the name or display name in kind 0
- when viewing a user's profile i should see the petname ive specified, and have some way to see the name or display name from kind 0
- when viewing a list of users or bookmarks, be able to discern which ive assigned petnames, and which are known only by their name, display name, or in the case of notes the subject tag

This is effectively a personal naming system and is independent (but may be influenced by) any socially assigned nickname suggestions. 

its kind of a big undertaking to implement petnames/labels in a meaningful way, which is why i think we need to spec this out better