@matt I think a great distinction is if people are signing up for an experience that happens to be powered by Mastodon vs signing up for Mastodon and using an instance as a vehicle for that. If you're an experience (eg yowza.social) then yeah, anything goes.
But like you said, if people are signing up for an account as a means to interact with the broader world (90% of instances) then at that point, an instance admin becomes a service provider and people expect a less opinionated experience