As far as I know, the Arabic word for god is ilah and the name Allah comes from Al-Ilah, which means like The God, the only one, uncomparable one, creator of the worlds, sender of the prophets etc in the religion of Abraham's, Moses's, Jesus's, Mohammad's etc (peace be upon all of them). Its more like a private name than an adjective. Also The God in all these religions are the same god actually, just some Christians understand him wrong. We believe that Allah is not trinity, some Christians believe that he is. One of us is wrong, but any of these beliefs actually doesn't change Allah. We just believe different things about him. We are talking about the same God (apart from Zeus etc).
Secondly, I don't think there is a verse forbidding it and the one you gave is out of topic. Giving a child the name Mohammad doesn't make him a prophet and giving someone the name Allah doesn't make him The God. But why do want someone this apart from ignorance and insult?
All around the world, people are divided and hate each other, harm each other. Even if there is a verse from Qur'an, the ones who want to do this won't care because they are not Muslims, Muslims don't do that, because they know this is an insult. Also these people are unrespectful and unlogical people, because what will bring this action is clear and any non-Muslim also can realize that. Giving the name Allah to a person will have serious disastrous effects in the world. They will be seen unrespectful in the eyes of all Muslims. Also some radicals are probably going to kill them. Even if they are killed or not, the Islam will look like violent and intolerant in the eyes of the world. I don't think they want to die like this, I think they just don't care. But in the logical sense, this action will bring no good, but a lot of harm to both sides.
If they do that, should we try to harm them physically? No. This part is clear. But there is a reality. We can't stop all of the radicals. Remember the "movie of the Mohammad(puh)" issue. Some people get angry and killed some people of the American Embassy in Egypt. They were innocent about this issue, yet they were killed. This was wrong, but we can't bring them back.
Because of reality, until most of the Muslims would become educated enough to respond without violence, they shouldn't attack to Islam like this, or movies etc. This is dangerous to them also.