As I am reading through what you post, it keeps appearing to me that you are not taking into account the possibility that limiting the number accounts per user will fix most of these problems. 3/4 of your post talk about just making new accounts to get around it. Instead of removing the feature, things should be implemented to make it work BETTER.
The only thing that I see that is /bad/ for Group C is that they can no longer be able to view artwork from somebody. As you said before, if they really wanted to they could get around it if it is so easy. I really just...cannot see how any of this is a reason to remove a feature, when it really can deter others. You speak of Group A as if every single troll out there is on the same level of 'desperate to cause grief' as others. This is not so, there are SOME that are not committed, and will just stop. This is different from Group B who just said something or did one thing wrong.
We have wrong-doers, and we have trolls. And trolls have different levels of trolling.
When I read this, all I am hearing is "It is not fair that an artist can block somebody from viewing their artwork if the person did nothing wrong." Is it not fair? Yes. But honestly the world is not fair. If we were to talk about fairness, is it fair that you take away a feature that gives comfort or helps even a little (EVEN FALSE COMFORT! There are people who legitimately want this) just because SOME people will do unjustice?
Your arguments are only valid if:
1) Every single person in group A is a high level of troll, and will do whatever it takes to harass somebody. If this is the case, NO form of blocking system would work. Not even basic blocking.
2) That there will be a common occurence of 'unfair blocking' and whine fests that people cannot view artwork.
3) That the account idea was not put into place.
So again, instead of speculations and what-ifs and flat out 'taking it down' the feature, in my eyes, just needs to be STRENGTHENED not eliminated. There should still be a feature where an artist can have the comfort of knowing they have control over their artwork on a public site. Keep in mind it is not the WATCHERS who make an art site, but the ARTISTS. Are watchers a big part? Absolutely! We wouldn't be anywhere without them! But at the same time, without the artists what would be there to watch...? Sure this system can be seen as a double-sided sword, but so is any blocking system.
So, in this case, I see no reason Advanced blocking, in your eyes, is any worse than basic blocking. In fact, with the arguments given...shouldn't basic blocking be removed as well since its so 'meaningless'? Something to ponder on.