$5 per year is a rip off ?
Looks like you're gonna have bigger problems later in life.
The domain-name system is hierarchical. Keep that word in mind: hierarchical. The top-level domains are fixed. Like .com, .net, .nl, etc. The second level of domainname is for sale. example.com or gryz.nl. Very cheap, open to everyone, as long as the name wasn't taken yet.
And then there is the third level of domainnames.
www.example.com. Or smtp.mailhost.com. Those names look like they are services. But in reality, they are just names. If you've ever worked in a company or university where the admins assign names for every computer, you'd know that domainnames are just names for computers. The general public knows them as names for services. But they are not.
Do you know anyone who as a domainname ? Especially someone who runs his own DNS-server ? You can easily ask that person if they want to create a subdomain for you.
E.g. suppose your friend has yourfriend.com. He's operating a webserver called
www.yourfriend.com. He can easily create a new subdomain called: pegasis.yourfriend.com. You can then create your own domainnames under that:
www.pegasis.yourfriend.com or ipad.pegasis.yourfriend.com or whatever.pegasis.yourfriend.com.
Whether something is routable or not has little to do with the DNS. DNS is about names. Routing is about addresses. In the DNS you can (must) couple names to addresses. Your friend can enter those entries in his DNS server, e.g. a connection (called A-record) like "free.pegasis.yourfriend.com A 1.2.3.4".
For some reason people think that all the domainnames they use must be second-tier names. E.g. I've seen companies who e.g. already own domainname company.com, then get an additional name: promotion-company.com. They could just as well have used: promotion.company.com and not wasted those $5.
Maybe there are companies that do this for free. No idea. But it wouldn't suprise me. All they need is a webpage where you can enter names and addresses, and they would inject that into their own DNS servers, under their own domainname.
A quick google: reveals that those free services indeed exist.
First hit:
dot.tk
So you can easily, and for free, get "pegasis.tk".
Is that what you wanted ?