If it wasn't legitimate, then the song simply wouldn't play. If the companies involved came to an agreement soon, then the technology could be rolled out in the country as early as 2011. Of course, there are some big questions that need to be asked about its practicality. What about legally "ripped" tracks from a purchased CD? How could they possibly be verified - or would they simply not be allowed to play on the phone either? What about free music?
Also, it is likely that for the plan to work, all companies offering legal downloads in the country would have to participate in it, for music to be "authorized" before being played - and so would all carriers. It is a sad fact that while online stores in other countries are increasingly stripping away restraining DRM content, Japan's record company trade group wants to push the country in the opposite direction.
Overall, it doesn't sound very plausible, but just the fact that it has been proposed and is being discussed seriously should be disturbing in itself.