Sorry to burst your bubble, but there are hardly any regulations that prevent a small ISP from implementing this. The whole notion that QoS is illegal is absolutely absurd. Today, major service providers (and one that I work for!) implement QoS for preferential treatment of some traffic across their backbone.
Do they have an obligation to disclose it to the customers? Probably. Would most customers mind this? Probably not. The average user would just like to be able to access their website unimpeded by "scavenger" class traffic.
Remember folks, most people really are not affected by policies like this. The people that are affected by these are not the sort that an ISP really wants to keep as customers anyway. Its a fact of life and, the reality stands, the only thing that makes it sleazy is the lack of transparency.
If we want networks that will be able to support the full gamete of voice, video, and data at affordable rates, we are going to have to accept QoS as a fact of life. If you have little more than a basic knowledge of how these applications wreck havoc in a network, I'd suggest running a simulation. (I do this for a living, so its not so hard to see). If you can't tell me why voice requires priority queueing versus web traffic that can handle best effort treatment, you probably don't understand the issue beyond an oversimplified argument that all traffic is "equal". Folks, it isn't. Traffic behaviors and needs make traffic unequal. QoS/Traffic Management/Traffic Engineering is necessary in today's oversubscribed environments to ensure that we can still access resources such as HTTP, SSH, VoIP, Video, and not be overrun by folks who crank up torrents, spew spam, and let worms run rampant from unsecured machines.