I mean, I feel like outlawing cross-domain site access in order to shut down online advertising is like burning the house down while you're still inside it to avoid taking out the trash.

Hyperbole.

Cookies were banned in European Union, e.i. only made available if the user agrees. Then it is up to the user to white/black list sites. The same could be made for external domains.

Most blockers already support that. It is already happening. What we need is merely making it mandatory by law.