Basically the title.
I have seen the EU-OS/Suse discussions for some months now. However, Ubuntu/Arch/Fedora are extremely mature projects. So competing against them will be hard.
I want to know how realistic the scenario (described by the question) is.
It’s practically unrealistic. Even for a distro governed by a US-based company there are a lot of download mirrors, so restricting downloads from all of them is extremely difficult (and anyway unrestricted foreign mirrors still could synchronize with official ones via VPN). Forbidding foreign developers would require identification of each developer, but few distros do this (Debian does, but e.g. Fedora does not).
Developers would understand that such restrictions effectively kill a project, so they would shirk them.