Unintended ambiguity: the Bastiat Free University.
Yeah, I know, strictly speaking I suppose there’s no real ambiguity; the presence or absence of a hyphen will determine pretty clearly in which sense it should be taken. But then there’s still an ambiguity when you say it aloud ….
Should this sort of ambiguity be sanctioned?
I don’t think the ambiguity is a problem, even in speech. It can be resolved by where you put the pause:
Bastiat [pause] Free University
Bastiat Free [pause] University
After all, the progression from two words to a hyphenated compound to a closed up compound reflects the shift in pronunciation as the use of a phrase becomes increasingly habitual.