Thinking of the audience as people who have never used Mastodon, and are very much used to Twitter (mal)practices, may I offer an alternative view/answer
about longevity of the server/s – it seems there is a bias towards bigger, better-established instances (some prefer to call them communities; they are indeed never called servers). Inside mastodon and its commitment to federation, quite the contrary: the more evenly distributed users are, the better. Therefore, when choosing an instance, people are encouraged to choose the smallest possible one, to contribute to said even distribution and federation. Yes it is possible that an instance will disappear for lack of money or any other reason. In a healthy community, the admin will be a team, and even if this is not the case, the admin can ask for contributions for the maintenance of the server/s that make up the instance. Twitter users need to be aware that, while a service is free this is because the user is the product, mastodon is not a business and therefore the model is not that business model; it is a federation made up of communities with costs towards which users should be invited to contribute. And even if , and when, an instance will disappear, it is common for the admin to warn its users about this, and nothing will happen: any one can simply migrate their account to another server, carrying following and followers to the newly preferred instance. Even better, it is possible, and not penalised, to have several accounts in as many instances, if the fear of one instance disappearing is too big to bear.
About the privacy concerns regarding DMs , some instances have a warning published, that should be published in all of them: direct messages, like email, should be regarded as postcards. Email, mastodon and Twitter admins can read messages if these are sent in plain text. Whatever your means of communication, if you want your messages to be unreadable by any one but the recipient, you should use some kind of trusted encryption system, like gpg.
As of federation, the ultimate way to be sure the admin will allow me to connect with all my friends on different instances is to become the admin. But it is not absolutely necessary. Most admins are open to dialogue when a conflict arises. Generally they require users to read, understand and respect the rules they set up for their instances and will only block instances in really big and flagrant cases of extremist practices. But then yes the possibility exists that an admin will block an entire instance so no one from either can follow each other. It is also possible that any user decides to block an entire instance without notice, so no one from that instance will be able to follow that one account. In this aspect, mastodon is a lot more like a real life social network than a corporate one – it is its members who decide who they interact with, not an invisible centralised force. Again the solution, or work-around, can include to get an account in an instance that is allowed to follow your friends, without the need to loose any of your existing followers.
As of stepping up as a mastodon provider, there is no need for the Librehosters network to step up. Any one of the librehosters members can do easily. I am seeing examples of individual people setting up instances with a very simple set up at home and/or with raspberri pies. From what I can currently see that things are done, any individual or small team is able to commit to whatever good values they choose and provide stability.
Hope this helps