In my (non-EU) country, ISPs are subject to relatively strict regulations, and Cloudflare doesn't fall under those regulations.
> One thing to consider also is that unencrypted DNS means that virtually anyone can read (and modify) those requests
Not "virtually anyone", it would require physical access to the GPON fibre between my home and the MSAN/CO/Exchange (non-trivial, scales really bandly), or the MetroEthernet backhaul from the MSAN to the BNG (where they would trip alarms and the last-mile provider would investigate). From the BNG onwards traffic is encrypted on-the-wire (MPLS with group encryption as far as I know) until it is handed over to the ISP. My ISP co-locates caching DNS with their hand-over routers, so here it would require tapping the fibres in their data-center (not happening without their knowledge).
Also, someone who is just mass-collecting my DNS requests without any other identifying data, and no ability to correlate IP address to users, has limited privacy exposure.
A centralised third-party, who can correlate source IP addresses with user-identifying browser cookies from other HTTP requests in the same time window seems like a much bigger privacy concern.
Americans, please sort out your last-mile provider+ISP monopolies (e.g. lobby your politicians for regulations that enforce competition), so that you can stop forcing unnecessary technical solutions on the rest of the world, who doesn't have this problem (if ISPs do anti-customer things, they lose business).