The reason for country wide bans i've learned from my experience in web hosting is people for that area set up sites that are there for the pure reason to be dDoSed, or host illegal content, so they have to ban the whole area. Which i guess you totally understand.
I'm sure the owners and support put the IP restriction in as a last possible hope to stop the attacks on the servers, a company i once worked for blocked all sign ups AND viewings from Braziil as a very last hope, and it worked. The global area ban is the best way of keeping control of the attacks, even though people do get upset.
Maybe the paid section should be looked at again for the restrictions, although it might be a global function of the script only.
For your suggestion there is one problem on a whole with that idea, most sites are made actually on the host, so how do you show the ones that are not yet made, also that would take up a fair bit of man power, and people would complain about the waiting process.
Regards
Mr Waller