Yeah, exactly, the way the israelis do it. Background information, ideally coupled with some sort of decent identity verification system (DNA, fingerprints, retinal scans, etc).

That issue with the watch list... I don't know if the airlines should be telling people who is and isn't on the list. What's to stop a group of terrorists from using that opening to periodically check which of them could get through security, and which ones were already flagged? There should be some efficient method of finding out why you (and the individual would have to apply for this, not a third party) are on the list, and to petition to be removed.