I doubt that the "name" is what confuses some members, it's rather the concept, many members do not understand that you don't need to necessary trust someone to have them on your trust list, or trusting someone with money but not really trust their feedback.
Yes, if someone understands how the system works, the name wouldn't confuse them. But if someone doesn't know about the trust system in detail (feedback, trust list, nomination process, exclusion process and so on) the name can confuse them. Or at least the name would point out what's the intention of the trust list and clear doubts or result in people searching more information about the trust system.
I can also imagine that a link to a complete trust system guide (or FAQ) on everyone's trust page would be beneficial to help people understand the trust system.
but i am almost certain that the majority of those with custom trust list understand this,
In fact, it's still very unclear to some members that there were big changes of the trust system and setting up a good trust list is much more important than it was back then when people never expected to get DT1 (or even DT2) because the system was so static.
Setting up a good trust list is essential now for everyone even if someone is not on DT1. The fact that DT1 is selected in a completely new way now since January makes a big difference because it's much easier to get on DT1 and their trust list will make everyone to DT2.
and most deny that fact when they are cough red-handed doing something shady like adding everyone who left them a positive feedback to their trust list just to increase their trust score.
Oh, I think most cases are because people have outdated trust lists they set up long ago when they knew it's impossible to get on DT1 (if they knew even what's DT). And personally, I don't know any case where people intentionally "confused" trust list and feedback to abuse the system when they got DT without involving Merit abuse or other clear patterns to point out their abuse. Or in other words: speculating to say it was confusion of the trust list would be pointless because it's possible to detect the abuse otherwise.
as far the trust system goes in general, i think number 1 priority is to try to somehow push everyone to start using custom list, specially now that DT list is way too large it could only get less accurate at some point and everyone needs to learn how to make their own list specially after having spent sometime on the forum and learned whose feedback is to be trusted.
Agreed, personal trust lists are important to set up and to participate actively in the new trust system. But it's also no secret that more people with trust lists will result in a bigger DT1 (and DT2). Adjusting the number of 250-Merit votes and 10-Merit votes would be an easy measure to change the total number of DT1 members (if DT gets too big).