It would be strictly better without middlemen.
There is always going to be some percentage of interest overlap between users that gets destroyed by federated moderation. It's too coarse grained and ruins the decentralized possibilities of the internet.
That isn't to say that users shouldn't be able to filter out whatever they dislike. Rather, it would be best if that was a user's choice [1].
I participate in LGBT spaces, but I'm not going to block people for playing Harry Potter. I don't appreciate people stepping in my way to censor things they think I shouldn't see or hear.
To make an analogy with Reddit, if I make a comment in r/conservative (without necessarily even subscribing to their ideology), I get banned from dozens of other subreddits via automated moderation tools. That's a lot like how Mastodon thinks the world should work. But that's not how people are or should be.
Mastodon (and subreddit mods) think everyone should wear a membership pin or be emblazoned with a Scarlet Letter. That's incredibly harmful to people and is leading to increasing polarization in society.
[1] I'm sure that could even be done at scale by subscribing to community block lists. It shouldn't be a hassle, it just shouldn't be centrally planned and executed with no recourse from the end users.