Not all way red, that leads to exactly the problem in the story of blocking traffic. Lights out needs to be a stop sign.

Yes, it does lead to blocking the traffic but that is the only safe action to do in such an intersection; if an intersection has traffic lights, there's enough traffic that stop&give way is not a viable operation.

Very wrong. Dangerously wrong. Please don't block the road if you end up in an outage.

Usually in that case you would make it a priority to the right /or left so that everyone only has to look at one side (besides the pedestrians) and in a very busy intersection people with common sense and education naturally do an alternance where you give way to every other car.

I don't know if waymos are programmed for that and it could very well be that there were so many pedestrian crossing it wouldn't apply it anyway.