Sure, but that's no different from switching to a different subreddit, in the current case of Reddit.
Which doesn't really happen. The mods of r/news are idiots, but only a tiny number of users actually care about that. Most people either just stop using r/news, or deal with it. That's not exactly a ringing endorsement of how things should be. Hell, the only time I've seen people switch subreddits is when everyone went from r/antiwork to r/workreform after that disaster of a TV interview; even then, the former currently has 2.6 million subscribers, the latter has 700k, so it appears even that migration was a failure. I can't imagine this is seen as a good solution.
Not really. No more work than posting on a different community on the same instance.
People don't want to post in two communities that cover the same topic. Duplicating work like that leads people to seek out a single solution, even if it's the worse solution. Reddit is so popular because it has a giant number of people posting content to subreddits all the time, meaning even niche topics have a healthy amount of fresh content. If you fragment users into multiple instances (even if they don't have to worry about creating new user accounts for each one), then it just leads to problems. Eventually they will move towards a single mega-instance, but then you run into the problems above: people won't leave that instance for a new one until they absolutely cannot stand to be there anymore, and some people are going to have lower tolerances for bullshit than others, which means most people are still going to be using the old instance for a very very long time, splitting content between multiple instances. In other words: why go to !worldnews when there's so many more users, and so much more fresh content on https://reddit.com/r/worldnews?