>if they find that funds have ended up on some crypto exchange they can try to block those funds and initiate a return process.

I agree in theory -- although I think this is quite difficult in practice, for a couple of reasons:

While it's easy to track Bitcoin from wallet to wallet (assuming the scammer isn't using mixers) it's hard to figure out which addresses are owned by an exchange. You'd need to work with a company like Chainalysis, and I don't have a sense of how expensive that is.
The exchanges themselves get a lot of support requests, and it isn't clear to me that a civilian would get a timely and serious response if they reported that someone had stolen their funds and cashed them out an an exchange. In fact, I imagine that in most countries exchanges are forbidden from releasing identifiable information on a customer without law enforcement involvement.
The (only?) way to track down the scammer is once they have moved funds out of an exchange. That's literally the first time that you might be able to connect an address to an identity. And, at that point the scammer has removed the funds. To retrieve some portion of the funds at that point requires an arrest, a court finding, that there be funds left to distribute to victims, potentially a search for other victims -- it's a long-term process.

Am I thinking about this the wrong way? Are there any exchanges that have gone on public record saying that they will initiate a return of funds without law enforcement involvement?

I wonder if there's an opportunity for a tool that lets people report a crime and pay a bounty for the conviction of the criminal. The bounty might be broken down into several standardized steps:

Verify the story of the person reporting the crime
Report to law enforcement
Notify other victims*
Track the funds on the blockchain
Figure out whether funds have reached an exchange / which exchange
Distribute balance of bounty on arrest, conviction, etc

*There's a fascinating trick for this in this Youtube video about cracking brain wallets at the 8:34 mark: https://www.youtube.com/watch?v=foil0hzl4Pg&ab_channel=DEFCONConference

Essentially, you send a very small deposit to the public address from which the funds originated using a vanity address. (For example, the vanity address could be: 1SCAM4SLRHtKNngkdXEeobR76b53LETtpyT). It's not a perfect solution -- although it might help in some cases.

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