If people were continuously renting cars to use as car bombs we'd expect rental car companies to do something to prevent it. We do expect ISP's to shut down child porn providers and would think of them as complicit if they didn't. In each case they are controlling agents; The ones able to effect a change.
The real problem is the apparent inability to identify copyright infringement across the pipe.
1. They have to identify the material.
2. They have to identify if the material has a copyright.
3. They have to identify if the material is being transferred without permission of the copyright holder.
I can see some serious latency issues.
If at all possible I'd ask the government wanting the filtering accomplished to create the filtering mechanism and then legislate its use by ISP's. If I were an ISP in that situation, that is. Then the ISP could tell its customers that "it's the government's system, not ours." And the user experience would be consistent from ISP to ISP. Additionally, all the complaints go right up to the source. No longer able to ignore the fuck up they created, the government finally turns their back on the lobbyists. Turn the page.
So if I was an ISP, I know what I'd be pushing. And I'd have the recording industry eating out of my hands.