No CN coins and in fact no altcoins that I am aware of, have really solved the issue that centralization of mining can cause transactions to be censored. This is an open problem for cryptocurrency.
This is only a problem if the miner can identify which transactions they want to censor by linkability or other analysis. Presuming that you can maintain unlinkability, miners won't censor transactions unless they want to censor all transactions. There's no easy fix for that - if someone wants to spend lots of money suppressing nearly all transactions, you are correct - they can do this.
CN has a viewkey. If the government takes control of the mining because due to centralization they can regulate 51% of network hash rate, then they can require every transaction publicize its viewkey. Effectively the government can force anonymity to be turned off, if they control 51% of the network hash rate.
That's essentially the same as blocking all transactions and thereby preventing the protocol from being used at all (so people would then have to use another, transparent, one, which doesn't even need to be limited to a view key but could include
signing it with your name).
Anyway, I made exactly this point last year. Too much crap got posted last year for me to find it though, but the conclusion was identical.