Instead of banning users, Sony hopes to preempt the practice.
On the updated official PSN support website, Sony explicitly mentions and details the new policy. In response to an FAQ that asks why your online ID may have been automatically changed to “TEMP”, Sony says that any such changes have been caused either due to being reported by another player, or because a moderator is investigating your username and has found that it breaches the PSN Terms of Service.
It seems Sony wants to get ahead of what has often been an issue with online gaming. In the past someone would have to report a profile name that was offensive, and they would have to ban them individually- which is something Sony seems to want to tackle pre-emptively. What the list of offensive names contains is unknown, since none is provided- but you can probably guess. How well this will work is yet to be seen, though.