I don't think there is a problem, but if you do MfD is the way to go.
Personally, I don't see that a pass is being given to admins to
violate policy because they are admins. It looks to me like it is a
group of longtime and active contributors who are using some IAR
leeway to have a little fun. The leeway is extended to them because
I'm pretty sure pissing them off and having them leave would do a
whole lot more damage than allowing a few subpages (using up how much
space and bandwidth again?) to continue to exist. The issue of the
domain name is a red herring - it has no practical effect on Wikipedia
at all. It doesn't draw in outside users, it doesn't cost Wikimedia
anything, it doesn't allow them any access they wouldn't otherwise
have. Its basically the same as a tinyurl address or favorites link.
When it becomes a focal point for their activity, a distraction for
other users or a source of disruption I will of course join you in
voting delete in an MfD.