Let's step back for a second and analyze your proposal by breaking it down. The first issue I came across is what's the definition of 'site hosted in the EU', ie. how a browser would check that? Let's analyze what options we have (not saying the list covers everything):
1. Do ASN scan of the IP where the DNS entry for that webpage points to
2. Analyze the web resources the page is referring to (much the way urlsca.io does)
If I was implementing that, then with 1. I would probably immediately hit the issue of some/most of the pages being behind a proxy (cloudflare, etc.). With 2. if you had Google Analytics tag on it (and most of the pages do?), then it would show a lot of references to the US.
My point is, that it might be hard to implement not only becasue of whether it makes sense, but also because of: how would you do it?
If you were thinking the way for instance broadcasting companies restrict their content based on where you try to watch a movie from (they only allow certain countries), then I think that's a totally different setup.
Actually I started thinking about the idea you are proposing a lot, but in a more general way. With all the recent development in geopolitics, on whether I can have all the data and technology in EU. The natural move was to verify how much of the solution I already have, ie. host the data itself on Hetzner Cloud. But I think EU is still far behind when it comes to the glue, ie. the software part and the analytical part. Practically every company needs some sort of tracking and most of those solutions that we currently have immediately put you outside of EU.
I am currently experimenting for instance with umami to swap out Google Analytics. They have a solution that you can self-host. But again, this is some effort compared to ready off the shelf GA that 99% of companies probably would use.