Don't get me wrong, Google is bad/evil in many ways, but the public suffix list exists to solve a real risk to users. Google is flagging this for a legit reason in this particular case.

It's not a legit reason at all. A website isn't "unsafe" just because it looks similar to another one to Google's AI. At best such an automated flag should trigger a human review, not take the website offline.

Google needs to be held liable for the damages they do in cases like this or they will continue to implement the laziest solutions as long as they can externalize the costs.