Fully agree, private/direct mempool is not the way.
Simply speaking, front-running is bad, back-running/general arbitrage is fine and can contribute to market efficiency.
Here’s an alternative: public, yet encrypted mempool. And the encryption/decryption is done in a decentralized way via threshold encryption. It only prevents front-running, not back-running.
We proposed a BEP for this: BEP-547: Encrypted Mempool for Binance Smart Chain
This is the larger vision: The Road Towards a Distributed Encrypted Mempool on Ethereum - mev - Ethereum Research