Default instance blocks should largely replace defederation
Since what content users might want to see is quite unlikely to match which servers the admins tolerate, choosing instance on the Fediverse can be quite complicated, which is inconvenient and off-putting for new users.
For this reason, and simply that the Fediverse is stronger united, I believe defederation should ideally be reserved for illegal content and extreme cases. If Fediverse platforms would allow instances to simply block the rest for users by default, the user experience would be the same, unless they decide otherwise.
A lot of legal issues get worse though if they occur as part of a paid service.
There are a lot of ways it could go wrong, for sure. IANAL, but lots of small and large companies have and do navigate these issues. But I wasn’t talking about legally contentious content; this would be a work-aruund for stuff that’s expensive to cache, or stuff you just don’t agree with and so don’t want to absorb the cost out of the goodness of yous heart. Just continue to defederate if you have any doubt.
Anyway, it was just a potential work-around to address OP’s issue. I’m not a Lemmy dev and won’t be implementing it.