If ISPs were able to charge for this (they want to), Netflix would have to pay a lot more for this sort of premium placement, giving smaller players much more room to compete financially. (i.e., if Netflix's cost to provide this best-in-class service they currently get for free is much higher, either it's more financially viable for small companies to pay for the same service, or they'll be able to offer video on demand cheaper than Netflix does)
This sounds like you're claiming that greater barriers to entry make it easier for smaller firms. In economics I think the opposite is generally accepted as true.
We've already seen that ISPs will abuse peering to charge for non-premium placement. And they'll charge that to smaller players too. So the end result is that Netflix will still get colocated, while smaller players are even worse off because they're paying extra for peering.
How do they "strongarm" them?
What’s to say that Netflix won’t strongarm ISPs after the NN repeal? No ISP wants to be the ISP that doesn’t have good Netflix support anymore, given their popularity and clout.
Right now all content producers are roughly in the same position: it’s equally easy/hard for them to get the same amounts of data to the consumer. Once you make it possible to put some producers before others, the wealthiest producers will use whatever means possible to be the chosen ones. In other words, Facebook will do their first and last to be free & fast everywhere. Given the last few years of experience with big players, I don’t think that’s a good idea.