Secret identities; not just for super heroes any longer.
After mulling over the literary use of True Names in popular fantasy, I think the simplest, easiest way to make them useful in the game is to make it a large modifier to the Saving Throw mechanic. A conservative approach is like this:
When a wizard casts a spell, the wizard can invoke a target's true name; the target takes a -4 penalty on the saving throw. Likewise, when a victim is targeted by a spell, they can call out the wizard's true name, if they know it; calling out the wizard's true name grants the targeted character a +4 saving throw against the caster's spells.The paranoid folks in the literature that fret about their identities are invariably wizards. I like the idea that penalties to their magic if they lose the secrecy of their true names encourages magic users to adopt a cover. The evil megalomaniacs will go totally over the line, eliminating all witnesses, which is a great motivation for a villain.
True names can also be embedded into magical amulets, creating a domination or charm monster effect (like the demon amulets), and weaponry can be enchanted with a true name, creating a slaying effect - an arrow enchanted with a true name would become a +4 item of named character slaying, for instance.
Some of the literature goes further, with the use of the true name stripping the victim of all magical power, but there's no precedent in the game for that kind of disarming, and I can't see it yielding good results - either villains die without a fight, or PC's feel totally abused. I did consider alternatives - should the true name grant magic resistance, or prevent all magic use, or a simple protection from evil type effect; there are already a few gigantic spells out there (like True Name in Unearthed Arcana) that grant major benefits to very high level casters. So I want a generic mechanic that can affect lower level play without becoming game breaking. But is a +4 or -4 to saving throws enough of a bonus/penalty when the characters unmask the identity of the town mesmerist?
I don't see the true name mechanic making a big difference to ordinary games; it's just not going to come up in random encounters during regular adventuring, assuming both PC and NPC wizards are using monikers, use names, or secret identities. In campaign play, where the party sets their sights on taking out a major target (like a certain lich in a certain lost tomb), there's now an incentive to go the extra mile and try to ferret out the true name to gain any advantage against an intimidating foe. Likewise, if a player character wizard starts earning notoriety as they gain power and approach name level, they now need to be worried about NPC rivals trying to do the same to them. A true name mechanic would be put in place to give a tangible benefit to research and investigation during campaign play, and highlight an activity that gets overlooked in lieu of the full frontal assault.