If you control the domain it's not a bad verification check. Can be removed if nsec is compromised. The way most people use it though, yeah.

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It’s hard to know which domain people control so it’s not a good verification mechanism because of that.

I bet nobody knows my nip5 without looking at it

Fair. Seems it's still useful for a brand though. Like if I'm the Conduit guy and all my Conduit homies have Conduit NIP5s then my NIP5 is suddenly a different site that's a red flag.

...But you're right people probably don't even check, seems like something that needs a re-think.

We could have a txt DNS entry signed with key as prove of domain to nostr ownership

Too difficult for most people.