It keeps them from participating by demoting them to the kids table, but you're still in a glass house to some extent.
I think this is the right answer, but the structure is going to require some amount of frequent drama just like this every time. You can keep an open federation policy until proven malicious, or you can verify partners, but I don't see the way around discussions.
I think this is just the leading edge unless folks are lining up to replace moderators in most communities.
Systems tend to fail slowly, and then all at once.
Most fediverse denizens have noticed how sane and measured the dialogue is, which is entirely a product of the audience who is here right now. But everyone's got a threshold, whether Reddit loses everyone or not isn't relevant if they couldn't be profitable with all of us. There's a death spiral coming, and if there's anything left Reddit will have to functionally change.
Easiest to think of Reddit as a party grinding on too long and starting to get rowdier, and the bouncers just quit.