You're unnecessarily complicating this. The server is aware of what fields are HTML so it just encodes the data that it returns like we've been doing for 30 years now. If your point is that this approach is only good with servers that you trust, then that's useful to point out, although we kind of already are vulnerable to server data.

You’re not getting it: we’re not talking about the server producing templated HTML, which is fine; but rather the server producing JSON, and then the client dropping strings from that object directly into serialised HTML. That’s a problem, because the only way to be safe is to entity-encode everything, but then when you use a string in a context that doesn’t use HTML syntax, you’ll get the wrong result.

It’s not an unnecessary complication. You fundamentally need to know what format you’re embedding something into, in order to encode it, and the server can’t know that.

Depending on what you do, you may want it unencoded, encoded for HTML data or double-quoted attribute value state (& → &amp;, < → &lt;, " → &quot;), encoded for a URL query string parameter value (percent-encoding but with & → %26 as well), and there are several more reasonable possibilities even in the browser frontend context.

These encodings are incompatible, therefore it’s impossible for the server to just choose one and have it work everywhere.