Stupid question: when people inevitably use this for pirate content, and the feds try to shut the service down ... what's the plan?
The feds will go after the instance admin that is sharing pirate content.
Someone is still hosting the content and paying for resources just like with every other service distributed or not so it doesn't really add anything new to the equation.
The plan is the same as it always has been. It's no different than running an open FTP server.
They can't shut down the service because there is no single service. They can go after individual servers, and that is fine. The admin is responsible for what happens on their server.