Indeed, if someone's a staunch opponent of advertising then it seems rather counterproductive to block an instance with advertising from your own - if they federate with you then that means people can see content posted on that instance without seeing the ads (I can't imagine how the protocol could allow for "portable advertising" otherwise).
That should allow for a natural "marketplace" to form that minimizes ads to just the level that's required. If people are able to pay for the server resources required for their instance without advertisement then people will naturally gravitate there, if those free servers become overburdened and can't expand their capacity then the ad-supported ones will naturally start to take some of the load back.
The only other way I can think of to let resources flow where they're needed would be to integrate some sort of cryptocurrency into the protocol, and while I'm personally a fan of cryptocurrencies and think applications like this are perfectly fine I can already hear people sharpening their torches and igniting their pitchforks.