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1) .net was originally created for network service providers, but is commonly available to the public, so their hold on it has diluted.

It’s one of the 5 original top level domains so is still popular, however, for online businesses .com(.au) is normally the standard and most visitors looking for you online will go to the .com.au version, thus losing yourself traffic.

2) It is possible for the general public to park domains at “Crazy Domain” so they didn’t necessarily do it themselves. I doubt you will have much luck obtaining it through the courts, as you haven’t even registered it as a business name yet & the copyright restrictions that are in place in the offline world, don’t apply on line.

3) There are different degrees of offensiveness, whats the name and we will let you know =)