Now let’s give users the ability to block domains like on Mastodon
That’s AFAIK already implemented, 0.19 just isn’t out, yet.
and everyone is happy.
There will always be the people who try to police others. Just look how even on Mastodon seemingly every instance has blocked Threads despite the fact that A.) users can block instances on their own and B.) Threads doesn’t even have federation, yet.