Since the Vera family was made available for GNOME in 2003, libre font licenses that require modified version to be renamed have proliferated. Sometimes this is done in the copyright license, and sometimes it is done with a separate trademark license. A font license ought to harmonise copyright naming clauses with trademark rights vested in licensed works, such as to clarify that trademarks inherent in the licensed work are not transferred or otherwise authorized. It may be worthwhile for a license to suggest reviewing separate trademark licenses if they are provided alongside the copyright license.

The SIL OFLv1.1 has a ‘reserved font name’ feature that requires versions modified in any way at all to have a name with nothing in common to the original, unless permission is granted to each distributor of the font. 

The Ubuntu Font License has a more refined approach, that takes into account two very different kinds of modification:

1. Modifications that do not meaningfully alter the typeface design overall but do change the font’s data representation. For designers, this means changing or adding glyphs in the same style. For engineers, web font services commonly do format conversion beyond mere compression, and subsetting (removing glyphs.) These examples ought to be allowed with use of the original name whilst visibly marking the work as modified, so users are not confused about the heritage of the work or that they are dealing with a modified version. 

2. Works that are derived works under copyright but visibly different typeface designs ought to be required to be renamed totally, while acknowledging their heritage in their detailed metadata. 

I believe a more refined approach to renaming requirements, very similar to the UFL's language, is an important innovation in libre font licensing that ought to be used in other libre font licenses. 

However, the UFL's specific implementation of this refined renaming feature is not ideal. For a start, it is anglocentric - what about a designer in Brasil, or packagers wishing to localise derivaties? Also, it doesn't seem to take into account multiple Original Names in a chain of derived works - which makes sense in that it was written for the simple A-B case of Ubuntu-SomethingElse. This is something the SIL OFLv1.1 handles through the 'Reserved Font Name' system feature. 

Then there is issue of the definition of 'Substantially Changed' which you raise. I believe a FAQ document from the License Steward with scenarios or actual case studies would help to clarify this. 

My interpretation of the definition is that it speaks to the Original and Modified Versions of the "Font Software" which is the whole set of fonts in the family. The 'simple acid test' for that is to have a typographically rich Scribus document with many text boxes with varying lengths, sizes, and font variant choices, print it with the Original and Modified Versions, and see if they are dissimilar. 

So if a single glyph is changed, even if the most commonly used glyph is radically changed (changing the latin 'a' to the Hindi 'एक' because the shape of 'a' offends you, for example ;-) that will trigger §2C ("Ubuntu derivative Hindi-A") IMHO - because the documents will look similar. 

However, if all but the ASCII glyphs are removed, and the glyphs changed to include serifs, and the glyph widths changed, the document will not look similar. 

So additions of glyphs that clearly follow the spirit of the font are not in a grey area, they are clearly under the §2C terms. 

The question of 'Who decides what is similar?' is similar to 'Who decides what font source is?' that is being discussed at http://typophile.com/node/74328 and that I hope readers of this bug will take a moment to join in on :-) Victor Gaultney, co-author of the SIL OFL, wrote that that source provision can be resolved through "developing a relationship with the guys who produced [the Original Version]." 

I think that for the UFL, if a user is uncertain about if their work falls under §2B or §2C (or similar clauses for licenses with a similar refined renaming section) they can contact their upstream user for clarification. 

And if there is legal dispute about a definition in a license, a judge will decide what the term means; its their job to interpret license texts and the law in a fair and just way, afterall. 

So, I think this bug can be closed when Canonical update the UFL FAQ with scenarios or case studies of correct and incorrect licensing by users.