I don't necessarily think the threat is "rights-holders suing Netflix for a negligently insufficient blocking system", but instead right-holders keeping their content away from Netflix if there's no working mechanism to restrict the content to the geographic region they negotiated.
In the end the right holders sell their content multiple times, often even multiple times within a single market. Now if everybody in the world can get US Netflix content the right-holders are the ones who will have problems selling content in other markets.