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How are we going to pay for all this?
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I think the biggest cost will be image/video storage. The text takes very little space in today's standards. The good thing is that symmetric fibre internet connections are becoming more common so it may be possible for members of the instance to contribute unused disk space to help with its image/video storage. This plus limiting the image/video sizes (and maybe forbidding video uploads altogether) will allow the instances to scale with user count.
Maybe coordinating with peertube or just using bittorrent to store video online would be good.
Sure, image/video is vastly more resource-intense, but it's not used for successful DDoS attacks and fiber connections don't stop them either. We need a better answer for horizontal scaling as servers currently aren't even closing registrations until they're already noticing performance issues and are vulnerable to relatively small increases in federated activity.