I love this idea and we could have the city's names on the map too, big cities appears with less zoom, smaller cities only when you zoom a lot on the map.
About the names, it is really hard to make a filter in my opinion... because some names could conflict with common inappropriate words in it, like:
BrassShield
GrandIckarus
DemonsButTheGoodOnes
I am really bad on creativity for this kind of puns, but for sure they could happen with common words too (Brass I imagine to be a common one in the context of the game)
I think we could have a blacklist of names, and every time a GM refuses a new name, it is added to this blacklist so to avoid the "Okay name but has a bad word in the middle" kind of situation
Also, we coud have player reporting city names with a description of why it was reported, then the GMs can approve or not the report and, if it does agree, give a timeframe to the mayor to rename the city, else it is randomly picked from that pre-made list commented before