if Cloudflare can do this on commodity hardware (stop attacks and block thousands of IPs), then router manufacturers who have custom hardware can do much more.

Also, in Russia for example, there is DPI inspection and recording of all Internet traffic and if it is possible in Russia, then West can probably do 10x more. Simply adding a blacklist on routers seems like an easy task compared to DPI inspection.

This can be made on a paid basis. For example, for $1/month a customer gets a right to insert 1000 records (block up to 1000 networks or IPs) into blacklist on all Tier-1 ISPs. For $100/mo you can withstand an attack from 100 000 IPs which is more than enough and Cloudflare goes bankrupt.