Index funds being illegal just means they're illegal for the poor and middle class. Any person with sufficient wealth could construct a personal index fund manually by buying the individual stocks. You would probably need millions to make this a worthwhile exercise.

Somewhat related, I really want to see someone offer some kind of customizable index fund. Let me start with a base index, and then exclude or include companies at will. e.g. start with the S&P 500, kick out companies like Exxon and Facebook and add in Tesla (pre inclusion), while the service auto weights investments appropriately.