(A reply to Mastodon is dead in the water)
The problems you mention come mainly from a single large instance. You seem to mention an answer but then gloss over it.
Why not have people run custom.website using their own domain name?
A Heroku instance and AWS S3 account, plus a domain name, and you’re up and running.
Just like at the dawn of blogging, running your own federated social instance isn’t for everyone. But you don’t need to be particularly technical to get things up and running. The Deploy to Heroku experience is cut and paste.
Will it be hard to – as a community – help people setup their own instances? Sure. It was hard to bootstrap blogging, too.
What’s dead in the water is continually relying on centralized solutions.