> Let's be clear: government has not just passed a law requiring packet inspection
Correct. That happened in the past already when ISPs were required to block access to the pirate bay.
The Pirate Bay block was not a law imposed on all ISPs.
It was a court order imposed by a judge for a specific case brought by the recording industries against the few largest ISPs individually.
Part of the case was basically that the ISPs already had filtering systems in place (in that case for the IWF child abuse blocks - again, not required by law but installed "voluntarily"). So the industry essentially said that adding TPB to the existing blocklist wouldn't be too much of a burden.
(I believe that similar orders have expanded it to cover a few more sites since, but not sure whether those cover all the same ISPs again).