The idea that corporations will come after federated instances that aren't even creating the posts instead of the source is nonsensical

Is it? Content from federated instances are cached on the instance itself too, no?

I wouldn't take the risk federating with legally questionable instances, and no one should have to. I'd just use an alt account for that on another instance that is federated, and I do.

if the source is taken down then it won't be on other instances anymore anyway.

That doesn't seem to be the case. vlemmy.net has gone down permanently it seems, and I can still access the content on there that were made while it was up from other instances.