Think about it; instead of those in charge or the instances deciding who they don’t want to be federated with and thus restricting content for the users, it would be better if users were able to block entire instances instead.
We’d be able to curate our own browsing experience so much better without admin/mod drama influencing the rest of us.
Edit: Alright so maybe not exactly replace defederation, but it should still be an option available to us, and in general should become the default action before defederation IMHO.
I agree that a certain level of civility should be maintained through moderation, but in my opinion it is bad for the user agency and individual control to have other people pre select for you before you even had the opportunity to decide for yourself if you want to engage with that type of content, even if they have nothing but good intentions.
Your suggestion of introducing a third, “true” all feed that users could browse sounds like a good compromise. Maybe restrict it to all instances that have application based or closed registrations to protect from the most obvious avenue of harassment.
Though I would like to emphasize again that I have had only very few negative interactions on Lemmy and haven’t observed xenophobia or bigotry as you suggest would immediately take hold.
Granted, occasionally there is someone trying to spam a transphobic meme or something to a couple communities, but that happens even with more strict moderation. A quick report later and the account and post are gone.