The way the EU could implement this is to mandate only using identity providers can guarantee they will not revoke people's identities, and the only way to make that guarantee watertight is to mandate only identity providers based within the EU.

There are no guarantees unfortunately, just contracts (formal and informal) that can be broken and paths as to what happens when those contracts degrade or fail. Agree with you on mandating EU only idps for those who reside within the EU jurisdiction.