I used to work at a university, so we saw a few interesting usernames go by. We thought 'dicklove' was a rather poor choice for a name, until we saw it was chosen by 'Richard Lovelace'.

So, as I've dealt with this issue a half a dozen times ... I don't know the context, so let me say that the only folks who have names autogenerated were the medical school -- they'd give me a list of incoming students, and I'd verify they didn't already have accounts (eg, from undergrad), and go through various patterns 'till I found a name that wasn't in the system. As it was, I still had human eyes look over eveything before they were passed back to the user, so I could deal with issues such as:

Not all users have middle names.

David X. Cohen, from Futurama

Some users have more than one middle name.

my neighbor's middle name is 'Edward Thomas'

Some users have more than one first name

My mom's name is 'Mary Ann'. It's pretty common in France, the American south and China

Some users go by their middle name.

My high school principal was always listed as 'W. Cecil Short', but I didn't know that a former co-worker 'Bret Jones' was actually 'Johnny Bret Jones' for over a year.

Some users go by an 'american' name that isn't their given name.

Very common among Chinese in America. (eg, cooking chef Martin Yan's name is Zhen Wenda)

Some users have more than one last name.

In Spain a person might list their mother's last name, their father's last name, or both. (I work with a Suárez-Sola)
update:Similarly some women will hyphenate their last name, and go by either name or both as it suits them

'Last' name is not always the family name. (China, Cambodian, etc)

Some cultures use {surname} {given_name}.

Arabic names

lots of ways it doesn't fit with the Western first/middle/last, although the link gives suggestions

So -- do you reduce two-name components to 2 letter initials? How do you deal with people who use their middle name as their common name?

And luckily, I've never had to deal with people with only one name (Teller, Cher, Madonna, etc.)