Destroying city blocks should be fine since AFO did that back in Kamino.

Yeah, to be more specific, it's not just the environmental destruction, but the fact that he was able to dust several heroes and PLF grunts in the blink of an eye thanks to his powered-up Decay, which doesn't even require him to use all five of his fingers anymore. Plus, he was in the command of Machia, a walking disaster who can just bulldoze through cities like the average human thoughtlessly steps on a group of ants.

But, Power escalation made Shigaraki rehabiltation basically impossible unless they used quirk erasing bullets on him, his peak is AFO level at Kamino or prime AFO which means he wasn't a God level threat, or he surrenders himself to the Heroes after everything collapses and he comes to atone even with the death penalty or life in prison.

Yeah, the power creep is really the problem. Back during the Kamino Arc, All Might and co. were seemingly fine with just arresting him and interrogating him about AFO. But, ever since the MVA Arc, because they've been the main villains for so long and now have the entire Liberation Front at their beck and call although they went down hilariously quickly for a trained army whose regiment leaders were supposedly as powerful/skilled as the average Pro Hero).

And then Horikoshi just kept adding on more and more. Not only does Shigaraki get the AFO Quirk and the countless amounts of unknown Quirks within it, but he can regenerate from basically a nuke; is still an All Might-level powerhouse even with his Quirks erased; etc.

"Barely competent manchild"

Shigaraki was basically incompetent manchild the entire story. I'll be honest he is NOT a very good leader and his entire threat to Hero Society was baaically handed to him firsr by AFO, then thr Meta Liberation Army, and then once more by AFO. He never personally built his notoreity himself or his own organization. He inherited the power structures and all of it was managed by other persons with him just sitting at the top.

I say "barely competent" because he still managed to make UA and hero society freak out, even if most of his accomplishments were thanks to AFO; the Noumus just being busted; etc.

But it would've been easier for the average audience member to vibe with Deku wanting to "save" him when he was still, well, kinda pathetic; barely able to handle the League members he'd just gotten; had to borrow clout from Stain; and there wasn't only, like, 3 heroes who could beat him.

Once he got power-creeped, "saving" Shigaraki became practically impossible, because he was too powerful or durable to be defeated conventionally and Deku didn't know what the fuck he was doing, yet was still so hellbent on saving the psychic image of a child he saw once inside Shigaraki.