I'd be fine if that were the law. What really frustrates me is the double standard where I can't host something that Microsoft or Wetransfer can without repercussions

When running an actually competent LLM is as cheap as a $10/mo cloud server (for the moderation), I'll actually agree with this sentiment. Probably wont be unpopular long beyond that point in time.

There's a middle ground for this though. Platforms like Youtube, Facebook, etc, have no excuse anymore. They can literally scan with these models they have available and handle it. So write the legislation based on their capacity so you don't screw the one dude just trying to support some indie game devs in a small community or something.