this breaks down because there are friendly jurisdictions and/or hosting companies to bad actors. see "bulletproof hosting" for instance.
Embrace the centralization.
I think tech companies deciding what people can access is the most likely endgame no matter what. People will demand protection. Whether it's a great firewall, a whitelist-only internet, ...or just automated filtering like this, which may be the most liberal option we can realistically expect.
What you're left with is things hosted out of uncooperative countries like Russia or China. But then shouldn't the block list consist entirely of things hosted out of uncooperative countries like Russia or China? How did this US-hosted business fall victim?