While the rules might vary the law is very clear here. Shrooms are a regulated substance and that community is hosted on a site which chooses not to engage in illegal activity, so naturally they are going to want to remove it.

Wouldn't they be able to pull the existing communities from their victim instance and start posting to those immediately, I wouldn't be as concerned about the communities they host appearing in the all feed but rather them flooding into the existing communities, since that can be much more damaging to the health of the instance since it directly hurts the communities on it, rather than simply serving up unwanted ones.