I love the top gear reference, but surely May would have been the obvious choice, Hammond is just asking for a crash!

The US (which is where I assume you are), has the second largest one in the world in current operation:
https://en.wikipedia.org/wiki/Bath_County_Pumped_Storage_Station

Short answer, it scales fine.
Now you need to find someone to pay for it.

Yes, but you would be seeing ALL posts from everywhere your instance knows about.

I kind of like the idea of being on lemmy.world, filtering to say aussie.zone and getting it to show me local.
Or being able to simply get a list of every community on another instance.

These are cool ideas.

Threads will mainstream threads.
Any good content here will be available to the Threads users, who will be oblivious to where it is coming from.
Eventually, Meta will take steps to break compatability, and lots of the most prolific contributors from here will move to Threads exclusively (for a host of valid reasons).
When it is no longer in Meta interest to federate, they will stop.

The fediverse will continue, but it will be weakened by it’s temporary reliance on Threads (who could afford to host large images/videos/etc, have lower latency, etc etc).

The issue was the owners choice of not federating with anything nsfw.

By moving to lemmy.world I could still post as much as I wanted to !australia@aussie.zone AND upvote boobs.

I moved from aussie.zone to lemmy.world already to get around federation issues.
Now beehaw.org has stopped federating with lemmy.world 🤷‍♂️

I don’t want to have half a dozen accounts so that I can access all the niches of this system, and yet it’s beggining to look like the dream of federation is stillborn.

Absolutely possible.
The key to simple self hosting is to have a dns record that points to your externally accessible IP, whether that be your real one or an external one hosted at a VPN provider.
If that IP changes, you’ll need to update it dynamically.

It’s becoming increasibly common to be a requirement to do so as CGNat becomes more widespread.

One of the newer ways to do that is with a Cloudflare Tunnel, which whilst technically is only for web traffic, they ignore low throughput usage for other things like SSH.