design their own product from scratch

I think you're right, even regardless of the license involved. One of my profs in school had told us nothing is stopping anyone from writing a whole new Microsoft Word, feature for feature, button for button the same. And in fact, look at Libre Office - a MS Word clone.

The missteps to avoid when creating a whole new clone are:

0. Don't rip off actual implementation code from the original and put it in your own product (this is a bigger concern w/ OSS since anyone can rip of pieces without giving credit)

1. Avoid confusing users that your clone is somehow an extension/iteration of the original (e.g. ripping off branding, or sound-alike names)

have it’s own network and just a simple plugin that can communicate with the fediverse

Mastodon uses the ActivityPub protocol, which is an opensource API. The US supreme court has ruled that implementing an API is fair use, copyrights do not come into play here.

So I think the only recourse for avoiding Meta and it's Thread foray, is defederating it on a per instance basis.

I fear this might turn real ugly, similar to how Google got in the browser game, dominated, and is now doing evil and shitty things like manifest v3 and WEI.