It's a nightmare for harassment though, treating all blocking as a sissy snowflake shield renders it essentially useless for circumstances where the other user is really malicious.

In that case having a system like Mastodon's that locks them out of Replying is better than simply covering them up. We can't really rely on Instance admins to block all malicious users or defederate from all malicious platforms so there needs to be a certain level of protection from the user's side.

I do think that Blocking and Restricting (preventing a user from interacting) should be different functions, you block communities and users because you don't want to see them, but you restrict users because they are hostile, malicious, or make bad-faith arguments.

Nah, your right to keep debating ends when someone else decide's they're not a platform for further discussion.

No longer being able to reply to the blocker, and ideally not even being able to see the blocker is the ideal, and both the blocker and the blockee should need to agree to reopen contact for the block to go down.

Like a restraining order, stops the original blocker from raising and lowering it at will as a harassment tactic.

Remember blocking on Reddit? It made it so you couldn't reply to anything in the chain. So if someone different replied to you you wouldn't be able to reply to them even though they aren't who blocked you.