It's a bit of a problem, indeed. Check my current display name as an example - I'm writing from a lemmy.ml account, but the display name impersonates another account in another instance (beehaw.org). Granted, both accs are owned by the same user, but nothing prevents me from doing it towards someone else's account.

Based on that, I think that:

• the Lemmy software should not allow you to use "@" as part of your display name. Ever.
• clients should always show which instance you're from, even with a display name. (A simple icon would be fine, as long as instance admins set up unique and identifiable instance icons.)
• two accounts in the same instance should never be allowed to use the same display name.

And for us, users: never rely on the display name. If the identity of someone is contextually relevant, always check the actual username, not the display name.