I think the context matters here. The ISP is demonstrating the dangers you've pointed out in site blocking by blocking a site that opposes site blocking -- that's genius. Why wouldn't people cheer? Clearly this is indicative that the ISP wouldn't support any kind of block in the future, even for material that doesn't support its views.

If your argument is that this should be put into law and enforced, I imagine this ISP would also agree with you.

Well, it's a small ISP and they've always been involved in Internet politics. Their customers know that, and probably chose them (at least in part) because they are political.