I think the way federation currently works spells doom for the fediverse, should any service of it get major traction. Currently, if you subscribe to a community on Lemmy or follow a user on Mastodon, your instance will pull the content of that instance/user and make it available for all to see and interact with. What seems like a good idea to spread content however is becomming the achilles heel of the fediverse: The admins of Lemmy/Mastodon instances are liable in many juristictions for the content their servers are distributing. This means in practice that many Lemmy/Mastodon instances block NSFW content for example, as the admins, understandably so, are either unwilling or incapable of making sure they are not running afoul of any laws.
As such, I think that the fediverse needs to offer a way for users to follow content from other instances without having that content be stored, let alone shared by their home instances.
A question I have at this point is where this criticism is best levied against. Is it the job of Lemmy/Mastodon to provide such a form of federation, or does the ActivityPub protocol needs to be ammended?
No, you're missing the point. You want a decentralised service to act like a centralised service under the guise of safety. Isn't that what various governments are trying with encryption? The way things are designed is so that there's no single power, your method would allow for the spoilt kid in the playground to take their ball and go home because someone weren't playing by their rules. Stop trying to make Lemmy into the same shitty things we've had before.