Instead, the potential users (or their corporate lawyers) look at the ambiguity in the license and say "I can't reasonably be sure that we won't get taken to court over this, so let's not use this thing."

Everyone I have seen advocate for "no harm" licenses has responded to this very point with by saying that, yes, that's the point. They seem to always assume that any potential user who is wary *must* be evil, rather than, say, an NGO who can't be sure they will always be clear of the licenses definition of "harm". So, no, not working as designed, unless you're happy for your software to only ever be used by a tiny splinter cell of the free software world.