If may try to be coy about it and abuse the "invite-only" mechanism to share with lots of people, but you are still risking getting reported.
There are also moderation tools in place that can let the instance admin see beyond the "privacy sharing" settings, so a more zealous admin would be the first to want abusers out of their servers.
What would happen? Nothing until it becomes a thing than it gets sued into oblivion.
They didn't find a magic loophole.
And those that really want to circumvent the law could just set this up in a place which offers more protections. If someone sets up an instance on 1984.hosting and uses a domain from njal.la... how would anyone be able to take it down?
They don't need to understand the fediverse to sue everyone and than everyone will disable the feature or adds some filter
People moved to Usenet providers but that traffic is much less than it was 5 or 10 years ago.
As soon as the industry gets wind about this practice people or servers or companies will get sued (there is after all nothing else these companies can do) and as soon as this happens some people in the line will try to protect them.
Could be server hosting company, the server hosters, source code Providers etc etc.
Btw that doesn't change the law: dependimg on your country there are already clear legal rules regarding lending digital copies to your friends.
They might fake users and start collecting data through those etc.
But only if it becomes a thing.
I think the main reason I'm not seeing anythinguch about lawsuits today is due to streaming services and the amount of legal media traffic compared to things like torrent.
This sounds like it shares a lot of the UX of piracy, so I'd be interested to know the bounds of it's legality. What happens when I join the largest instance and upload Universal Media Group's catalog?