@terryenglish is your point that you prefer centralized system where a single central authority decides everything?
In my view, federation seems better. If a situation like you describe happens, the thing to do is either to influence the admin to change policy about blocking the other one, or else move to a different instance that works better for you. You have options, in contrast to the centralized case where you can't do anything if someone get blocked.
@terryenglish I'm sorry to have misunderstood you.
How I came to that, was from your statement that "federation is not a good moderation tool". Because how moderation happens is very important, my thinking was that you preferred systems where moderation worked differently.
Anyway, I see now that it was a misunderstanding.
Regarding letting technology work as intended, I think many folks would see one instance blocking another instance as a feature they want the tech to allow.
... but of course I agree that blocking because of admins having a personal tiff is not how the tech was intended to work.