I’ve set up an XMPP server a few years ago. It worked beautifully!
Try installing the newest kernel available as that’s where hardware support comes from. Since you’re on an Ubuntu based distro - you could use somerthing like ukuu. Or just switch to a more rolling release type of distro.
I guess if it only affected the UI component and did not initiate the actual federation - maybe it could work.
Usability-wise - absolutely agreed. I do wonder if it’s possible to implement it on a technical level in a way that does not cripple smaller instances.
I’ve not used it as FTP as it wasn’t built for that. It was, however, brilliant for messaging. In regards to some comment below about the domain - you could always spin up a little unbound instance (+wireguard for your own stuff everywhere).