This is exactly one of those nightmares that motives our project. Furthermore, consider in addition the following dynamics:

If it becomes infeasible for providers to offer services legally and also for people to self-host, there is still going to be demand for different services, for example network traffic routing and obfuscation. Who is going to provide those services then?

Well, even right now besides morally acceptable solutions there are many (even clearnet) markets which are going to be offering VPNs, proxies, but which are not hosted in datacenter servers or self-hosted by the provider, but which have rather been set up on infected devices. In fact, these markets in general tend to specifically differentiate between datacenter hosted services and "residential ips", which are basically infected computers / routers, like the one you might have at home, as an example.

Specifically, you can imagine that residential ips are looked for by hackers, because these are likely not going to be blocked by providers like Cloudflare and so on.

You can see now where this is going. Would there be such a total dystopic effort at eliminating even these options which you have stated, then as a result of this you would see more & more innocents become the collateral victims of repression. Essentially, imagine police knocking on your door because some hacker orchestrated an attack over your network. Personally, no matter whether innocent or not, an accusation alone is a very defeating thing for any human being, since we are social creatures.

You can then also imagine, that in combination with this, that trust-based systems are both more mathematically but also probabilistically less resilient than distributed platforms. This means, there are innate vulnerabilities in them which endanger these same innocents.

So our advice, no matter what the situation, the dominant strategy will always be to self-host and use distributed platforms, and probably also have good iptables knowledge!