I just turned on Direct Checkout late last week and have had only one issue with it. A few customers have misspelled their shipping addresses. For domestic packages I don't have much trouble correcting misspelled cities or street names, because I know the format of US addresses. But I also ship a lot of international packages, and international address formats are very foreign to me.
I was able to make the proper spelling changes to the two addresses this has happened with, but I wish there was a way Direct Checkout could verify an address before letting the customer submit it. At least just verify that the city name entered is actually a city name.