It also seems to be an awful lot of "on paper" considering they haven't built a prototype.
Finally, as I was searching for "full cutoff" to make sure I wasn't imagining it, I found this informative website on the subject of light pollution and solutions: http://www.lrc.rpi.edu/programs/NLPIP/lightingAnswers/lightP...
LED lights don't have narrow spectral lines, so they represent an advantage for this reason also.
All lights, narrow or broad band, present problems for optical broad band imaging.
If we could get all cities to go with low pressure sodium lamps (that only emit at a few wavelengths), astronomers would be very happy. The only problem is that city residents tend to not like the monochromatic look you get from not having a broadband light source. So San Diego, for example, switched to low pressure sodium in the 80's to try to protect the skies for Mt. Palomar. But residents started screaming (it's leading to more crime!) so the city went back to high pressure sodium.
On that basis, I might have argued for high pressure sodium (to smear the lines) instead of low pressure, and I would have been quite wrong.
Given these issues, it's no wonder that a mountaintop in Hawaii, and another one in the Atacama desert, are now the preferred locations for optical astronomy.
Your original thought is basically correct: we do lose the ability to do any meaningful work at the wavelengths of the lamp emission lines. But the damage is concentrated at a few wavelengths. So we trade having noise over the entire spectrum for a few really, really noisy pieces of spectrum. It's generally a excellent tradeoff.
But even low pressure sodium lamps have some emission spread over a large wavelength range, so it is becoming increasingly difficult to do optical work near major urban areas. In the long run most of those sites will probably transition to mostly IR work.
For the telescopes near big cities, I'm not sure if anybody has worked out the relative contributions of street lights to say billboards or car dealerships or backyard flood lighting. But from standing on the summit of Mt. Hamilton and looking down into the valley it would seem to be mostly street lights
The only other likely sources are building lights and cars, and I'd think street lights far outnumber either of those in their ubiquity.