Lemmy isn't a perfect solution. The problem with Fediverse technologies is that they're not actually decentralized, they're polycentric. As you pointed out, an instance admin can make a lot of trouble for the users of their instance.

However, it is a step in the right direction. The cost of switching from a particular instance to another is fairly low. Your point about reposting supports this argument. If other communities offer the same content, there's no need to tolerate bad administration.

I don't really see reposting as a serious problem. It's a minor annoyance.

Privacy, I don't think the privacy concerns are more serious with lemmy than with something like reddit. Just don't any personal information to your account if you can avoid it.

Server issues, I don't know what the solution is to that.