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I think it's important to have a policy up front and let people know about it, either way. The worst thing as an affiliate is spending a ton of time and money building something then having a sponsor let you know that it's not acceptable.
I've used a lot of domains similar to sponsors in the past, and I can say the most successful ones didn't mind. Made a fortune with RealityKings, Bangbros in the day, and they were always understanding, as they knew my marketing methods depended on having a similar domain, but I wasn't stealing SE traffic or just getting typos.
I think either way is fine, but deal with it early on, and keep communication open with your affiliates.
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