As it reads, the FAQ states "...usernames are not currently recyclable. Even if the journal were deleted, you wouldn't be able to claim the username..."
This could be re-written to say something like "Only after a deleted journal has been purged will its username become available for re-use. However, users may not create a new journal with a purged username but must rename an existing journal by purchasing a rename code. See http://www.livejournal.com/support/faqbrowse.bml?faqid=25 to learn how to change your username."
My apologies if this has already been pointed out somewhere.