The instance seems to be mostly right wing trolls. I know defederating is unpopular but I don't think much is to be lost in this case and it can save the mods some headaches.
Edit: the response on exploding-heads.com to my reporting of transphobia. Courtesy of the "second in command"
That's also not what defederating is. Nobody's speech or ability to see speech is being restricted, since we are all free to set up accounts on other instances. Users are making a reasonable request to the instance owner for a normal moderation action that is in line with stated community standards and past defederation decisions (i.e., lemmygrad); the instance owner is free to honor it or not.
The basic question, which every fediverse instance has been having to deal with since inception, is how to draw the line on communities that willingly include bad actors. It has to be drawn somewhere, and where you draw it says a lot.