There is an advantage that Lemmy's backend is entirely an API with a detached frontend. There are already API wrappers for Rust and Typescript that are officially supported, so I'm sure it's only a matter of time before someone writes a robust automod that can be implemented for communities that desire one.
I have a bit of interest in doing it, but I know nothing about the API itself, so I'm not sure how easy it would be to grab every new thing submitted to a community or instance for moderation.
I did it, but my buddy has a server with extra resources that he doesn't care if I use and I already owned domains.
Say $20/yr for domain, Lemmy needs around 150MB of RAM and almost no CPU. You could easily do that for $5/mo. Slice up the domain renewal, call it $8.
So far, there are upsides and downsides.
The upsides, I can federate with anyone I want and it's unlikely that they'll defederate with me because I'm one guy, and maybe a handful of friends if they want accounts. Two, I wanted something I could use as a blog anyway, so I made a mod only community on my instance where I can blog. I don't care if people read it or not, it just seemed fun.
Downside, finding communities is relatively more laborious. I have to go to other instances and look at their communities, or all feeds, to find things to subscribe to at home. Which means for each one, I need to copy the link or name, go to my instance's search, then go to the communities tab and subscribe. On a big instance, someone probably already searched for a lot of communities at least once, which is enough to index it. But on your own, you gotta do it yourself and it can get a little tedious.
Overall, I'm liking running my own though, so I plan to keep doing that.