With all the discussion of forming Wikipedia organizations outside the US, it's pretty clear that it's going to happen. Even if you could turn back the tide now, it would happen later. As for whether they can officially use the Wikipedia name or not, I have an idea, as a suggestion both to Jimbo and to anyone forming such an organization.
The model I would suggest is that of the various organizations (fan clubs, essentially) that develop for cultural phenomena like Star Wars. Generally, they're tolerated and passively encouraged, because they help promote the project. Even though there may be some unauthorized use of images and logos, it's rarely necessary to interfere unless a group starts giving the impression that it's official and actually represents the project (in this case, Wikipedia and the foundation). This fits in well with Jimbo's Benevolent Dictator model.
If Jimbo is concerned about competing *official* Wikipedia organizations, I think part of the solution is to register Wikipedia as a trademark (and Wikimedia, Wiktionary, etc.) belonging to the foundation. Use of the names already brings some protection, but trademark registration makes things simpler if there's a dispute. Registration in the US should be sufficient for now. Check out the Paris Convention for the Protection of Industrial Property, which covers international trademark protection.
I know registration has been discussed by other people (Kurt in Germany, for example). Actually, I would recommend that nobody register any trademarks except the Wikimedia Foundation in its official capacity. Let Jimbo and the board take care of that; they're quite capable of handling it, and it will prevent confusion and conflict later on.
--Michael Snow