I went looking for a solution over at Wordpress.org.
I found a plug-in called Ban Hammer http://wordpress.org/extend/plugins/ban-hammer/
It does exactly what I want - which is to prevent users from registering with a hotmail.com address and gives them a message why. "Hotmail" Begone!!! Yes!
Now all I have to do is send a personal note to all my existing hotmail users asking them to change their emails before I delete all hotmail.com users in 2 week,