And if the site can see your data assume the government can see it as well, they can get it with a warrant.
A warrant will maybe warn the site and the user that something is going on.
A man-in-the-middle attack without a warrant delivered to either party is more likely to go undetected.
Updating others javascript as a proxy isn't "easily".
Also if the government goes all this way to tell each internet provider to spy on people, why do you think they couldn't tell certificate authorities to spy on people? It is the same level. I wouldn't be surprised if many CA's in USA already does this.
And the way to spy on people via a certificate authority is exactly as described, you get a CA that signs your man-in-the-middle certificate for a website you do not own. Then you MitM that traffic using that certificate, while still getting a green "lock" icon.
With current WebCA certificates, certificate transparency does help a little to detect such MitM certificates, and some CAs have actually been caught red-handed. There are processes to punish or remove such CAs. However, this law would also prevent such actions, thus making it impossible to prevent any future malfeasant CAs.
About an example MitM certificate case and removal, see the DigiNotar case: https://blog.mozilla.org/security/2011/08/29/fraudulent-goog...
For more about how certificate transparency works see http://nil.lcs.mit.edu/6.824/2020/papers/ct-faq.txt
If this means users gets more power over what CAs to trust then that is a good thing.
And depending on how that law will be interpreted by courts, manually distrusting might be considered illegal.
It is just a display change, all the law says is:
"For those purposes web-browsers shall ensure that the identity data provided using any of the methods is displayed in a user friendly manner."
I don't see how adding a warning icon or block icon instead of the lock hurts would be banned. To me it seems like so much here is based on baseless assumptions.
I would also urge you to refrain from using terminology such as "baseless assumptions" when your own assumptions are so easily refuted by directly reading the text of the proposal.
Do you really think your average user is going to go into the browser and manually distrust root CAs? We have learned again and again that good security is "secure by default", not "secure after arcane configuration".