I haven't tried Backblaze B2 but I agree with you on engaging in AWS hell. Litestream should work with any S3-compatible API. I've added an issue to add guides for B2 & Minio[1].
Regarding Postgres vs SQLite, I've found that I can use much simpler SQL calls with embedded databases when I don't need to worry about N+1 query performance issues. That makes many of the query features moot. That being said, there is a JSON extension for SQLite[2] although I haven't tried it.