Here's how I would envision the system to work:
1) 'BOB' meets 'JIM' while out caching
2) JIM is a premium member, BOB is not
3) BOB can log that he found JIM and maybe even get a cool "JIM" icon on his FOUND screen
4) JIM cannot log BOB, because BOB is not a premium member. Get with the program BOB!
The game would be to collect all the cool people icons, kind of like with geocoins. I do like the idea of JIM needing to verify that BOB found him before BOB gets the cool JIM icon. There could be a screen which displays a bunch of the icons with a link to view the log and a link to the persons profile.
Other non-premium Limitation ideas:
1) Allow BOB to be found, but not allow him to have a personal icon??
Just some thoughts.....