A user should be able to interact with every other user if both wish to.
That's the problem, as that isn't possible right now, unless your twitter circle took just the right instances for themselves. Sure there is self hosting, but down that road of argument eventually everyone will be self hosting.
"People can just look away!" is a terrible analogy cause they wouldn't have to look at an ad if it is hidden. Yet at limiting they would still be able to walk into their store and buy something. Right now blocking is removing the ad, the store and all its personal altogether.
"People who are unhappy can just leave." is the same argument you are trying to impose. To where, i ask you. Nevermind needing to leave your current toots all behind, it's a terrible suggestion and horrible UX.
This is wrong, else every self hosted instance would've been a storage nightmare.
I assume the later is something CP? Yes, those are legimite cases, just like spam/DdoS, but even then in every case i've seen yet, a Limit would've been enough. A pretty good example seems to be qoto.