There is no country on Earth that will meet your requirements for hosting. For example, if you host in Russia, you probably can evade the US government's prying eyes, but then you have to deal with the Russian government's prying eyes.
I strongly doubt Digital Ocean would give customer data to anyone without a warrant from a judge. And there could be some scenarios I'm not thinking about, but I also doubt a judge would ever grant a warrant to collect bulk analytics data. And I think it would be unlikely that law enforcement would want to request a warrant just for some narrow analytics collected on a few specific individuals.
Also, as others have pointed out, you actually make yourself totally fair game for US intelligence agencies by being in a non-FVEY country, and even more so because Iceland's ISPs peer with ones in FVEY countries.
But way more importantly than all of that, the threat model is wrong. You're likely at far greater risk from cybercriminals and regular blackhats than you are from any government. Digital Ocean (very much unlike Linode and some other big providers) has never had a (known) breach, and probably invests way more into security than the Icelandic provider you switched to does. DO likely has many world class security engineers employed; maybe your Icelandic provider does, too, but it's less likely.
And this isn't even going into the added management and latency issues.
I feel like you're kind of handicapping yourself without any significant privacy gain or increase in customer acquisition. You're getting feedback from very suspicious people who want to block all use of your, and others', services. You should take feedback from such a group with a heavy grain of salt.
This also does nothing to actually get the domain removed from the block list - there is probably nothing you can do there, other than gray hat stuff like constantly rotating domains and IPs, or pivoting and changing your entire business model and company.