I bet if residential proxy ips were added to blocklists en masse that those ISPs would rather quickly clean up their network.
ISPs have been fairly silent on the topic (it is a hot topic for many of them due to the kimwolf botnet leveraging resiproxies to function and launching attacks). In many cases, being a resiproxy is a violation of the TOS - but they struggle with enforcement and how to do customer engagement given that most resiproxies are loaded without the end user knowing. So you have an educational problem - how does an end user figure out how to remove it.
Some ISPs could null the resiproxy c2 infra - and a few have played in that space.
Home router vendors could play their part and notify users exactly which device is connecting out and give them an option to isolate, etc.
What would the case be against ISPs here?
Your ISP is not responsible for ensuring that the connection they give you works to access any particular sites (see, for example, all the sites that already implement geo-fencing to block or alter the experience based on country of origin).
But that doesn’t somehow create a civil case against your ISP for not acting in response to the 3rd party action.