Cyanogenmod 7 tried to totally deny permissions for apps and it was not a good idea. It resulted in apps crashing a lot. Also the reason they didn't continue to do it in Cyanogenmod 9 and 10. Faking permissions is definitely the way to go though.
edit: pdroid was the other (http://forum.xda-developers.com/showthread.php?t=1357056)
I think Android would have much better cred in the geek community if this was standard, but the legal and business hoops it jumps around and out of make it a pipe dream. I will say when I meet Infosec guys in my area and show them that app, even the iPhone guys are impressed and want to know how to get it if they got Android phones.