Great Idea In Principal
Having for worked for a couple of Large Aussie ISP's, I can say that whilst this is a great idea in principal, it's execution is not a simple matter.
As you mentioned there is already a system in place in Aus that advises ISP's of infected hosts.
What they fail to mention is that this project while well intentioned, didn't really provide anything that wasn't allready in place. Services such as mynetwatchman, and dshield were already established and able to notify ISP's of infected hosts. But more to the point the problem has never been identifying the infected hosts, the problem is the point where someone has to pick up a telephone, and tell a 60 year old granny that her windows 98 computer is infected with a virus.
What's that son? - Microsoft recommends I reinstall my OS from scratch? I should really download Ubuntu on a neighbors PC and burn it on to a disk?
I believe the only way forward is an automated walled garden approach that can be standardised and subsidised. - This could be as clumsy as the user being assigned a special dns server with a catchall redirect to a miiror server full of simple instructions and open source tools to identify/remove and protect.