I think this could be very useful for some applications, and is very compatible with the wallet permissions proposal.
That said, it could also be a privacy leaking vector, so in addition to the ability to grant full access to your address book, it would be nice for wallets to include an address selecting method, maybe wallet_selectAddresses. Imagine a file picker: The dialog may require one file, or may permit multiple selections. You might even select a group to selectively disclose. It’s possible this selector could simply be integrated into a primary permissions-request screen instead.
One parameter that might go well with this (and any permission, actually) would be a justification field, so that the wallet could provide the justification given by the application for why it is requesting this permission, and what type of selection should be made. It would be up to the wallet to clearly distinguish the app-provided justification from its own presented information.
There is also a question of the data provided in response: Could this be an opportunity for the user to provide their own nicknames for addresses they are aware of? Assign their own icons to accounts they track? Both of these would currently be available from MetaMask’s address book implementation, but for the sake of standardization, we should probably choose something that is available in a variety of contexts.