I understand your position, and I don't want to be offensive. I simply want to be clear.
The X-Prize is intended precisely for this type of industry stagnation, and has been very successful at that goal so far. Winners solve unbelievable problems in unbelievable ways.
I am, if not an expert, nearly so, and I can say that my first thought is not better filtration. As you rightly point out that is a very hard problem, technically impossible too if you limit the framing of the problem to only information available to the server and consider each event in isolation.
I am a little surprised that you as a self professed expert keep harping on the futility of better serverside filtration when your very argument is that it isn't a good approach. Why are you assuming that others would choose a poor approach when you would not?
For example my first thoughts go to ideas like: a home firewall auto configuration / lockdown tool and associated marketing campaign; inexpensive home network security hardware; better anti bot software; a police botnet; browser and os patch sets; political campaigns to change regulatory requirements; graphic design, video and other media to improve understanding and provide easy to implement solutions, economic/business models that naturally incentivise users and/or device vendor to prefer better security features on devices. In the end perhaps it would be none of these things are perhaps it would be some particularly spectacular bit of server filter coding.
The point of prize systems like the X-Prize is to efficiently solve hard problems. It is not to solve it in any particular way. Is there no better algorithm to recommend movies? No there isn't, until you consider human factors (The Netflix Prize). Is human space travel truly only the domain of nation states? Yes it is, until the Ansari X-Prize.
Before these prizes were won, their solutions were impossible, afterwards they are simply solved problems.
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P.S. In addition to your mistaken impression of my inexperience in the filed you are also mistaken that the information I posted is "off a random website". The information is from Akamai's State of the Internet site and represents Akamai's "real-time 24-hour global attack data: sources, targets, and types of attacks". It is linked to directly from Prolexic's home page. Though, I'm sure as an expert you knew that.