Yeah, they will use their domains, and they can sign in with Bluesky. So it is the same account to a pretty significant degree. What I'm wondering is if the Frontpage user would break if Bsky.app disappeared, or if the user could still sign in as the identity is somehow truly decentralized.
As for domains as user names, I guess ActivityPub could achieve something by allowing users to have verified websites (mastodon style) appear as their user names. I don't really see what would have to change on a protocol level to make this possible.