There is lots that can be done. Unfortunately the relay software is lacking in features because lack of developers. After all the development of relays is done by volunteers.

I run one and it doesn't even have a moderation panel. You literally have to search through MySQL using the cli to find the note., and it's hard and time consuming.

You're right. It will fall on someone's head, and the people who will fall on is the legitimate people who are using nostr, you and i and everyone else who uses Nostr for legit purposes.

That's why I run my own relay and host my own media because the free relays will eventually get banned from their host, for lack of moderation.

I ran my own hosting service in the past and it's hard because the ISP, cloudflare would police my company,

It's my personal opinion that the hosting companies should not be liable for the material that their customers hosts but unfortunately we live in a world were everything is policed. So until we get the laws changed though the political system we have to play along.