Are blocking unlawful? I don't think so. Their country their rules.
Business-wise it's risky to deliver your service from IPs that also serves dirty content. Technical solutions exists, even if you want to stay on Cloudflare.
Country-wise it's risky to block the entire internet when football is on.
But it also highlights the fact that the idea of blocking “dirty IPs” is at best a blunt instrument. Every ISP has abusers. Some are worse than others at self-policing their customers. Cloudflare is reputable and better than most. Given the huge breadth of sites sitting behind Cloudflare, it’s crazy, IMO, to block all of Cloudflare.