cyber-squatters really suck IMHO. It is his, or her, domain now and there is nothing you can do about it unless you want to pay the extortion money.
About the .org thing...
When you tell people about a website they think "dot-com" no matter what you say. It was the original "website address" that everybody thinks about. Dot-com this, dot-com that, etc. If you use anything other than a dot-com your users may never find you, sucks, but true. There are a limited number of dot-com names available, but you should try to get a name that is available.
Think about the White House, ever been to their site? I will wait while you go look at whitehouse.com......... LMAO, not a good thing eh? Even though you thought it would be there, they are a dot-gov. That is exactly the reason that site used that name, for lost surfers. They probably get thousands of misdirected people each day to that site.