Should you use Let's Encrypt for internal hostnames?

Wish it were as simple - ultimately having a name-constrained and publicly-trusted CA is the same as having any publicly-trusted CA and comes with a ton of wonderful burdens like audits.

You're essentially running a public CA at that point, and that isn't easy.

This is not a technical limitation though. It's a policy limitation.

In theory, a name-constrained intermediate for `.example.com` has no more authority and poses no greater risk than a wildcard leaf certificate for `.example.com`. In both cases the private key can be used to authenticate as any subdomain of `example.com`.

But, name constraints are verified by relying parties (the clients and servers that are actually authenticating remote peers using certificates). It's hard to be certain that everything has implemented name constraints properly. This is, ostensibly and as far as I know, the reason CA/Browser forum hasn't allowed name constrained intermediates.

At some point it probably makes sense to just pull the bandaid off.

CABF and root programs allow NC'd CAs - they're just a pain to operate.

The infra itself, keeping up with compliance and root program changes (which happen with more frequency now!), CT logging, running revocation services (not easy at scale). Plus then things to consider like rotation of the NC'd CA. You'd have to rotate at least once a year, perhaps less given domain validation validity periods. You'd also likely need to have the chain ('chain' used loosely, we know it's not really a linear chain) be four deep like: root->CA->your NC'd CA->leaf, 'cos the root should be offline and unless you're not doing these in much volume I assume you'd want to automate issuance and not gather your quorum of folk to sign from the offline roots. That might not be an issue for many, but it certainly is for some.

(Full disclosure, I work for a CA for almost 2 decades and have pretty intimate knowledge in this area, sadly).

It's interesting to hear that there's already a NC protocol today, but most in this thread are aiming at "should" not "can". The point is that a 90-day, name-constrained CA has no more authority than 90-day wildcard cert if both are issued via DNS-01 validation (modulo nested subdomains), so it shouldn't be subject to the same regulations as a public CA with no restrictions (which require CT logging, audits, revocation services, security requirements, etc as you enumerated), or really any more restrictions than those necessary to be issued a wildcard cert. This would be very beneficial for private networks and would have even better security properties than wildcards. Is there any reason why this shouldn't be possible?