Precedent is a thing with courts and the justice system. Cloudflare (and private companies) can do whatever the fuck they want, with or without precedent.

If you're cloudflare, you have every right, as a private company, to do or not do business with any single client.

Yes, but if they start controlling which content they serve then legally there is a strong argument that they become responsible for what content they serve. The legal term is being a "common carrier" meaning that if they serve the public without discrimination they are subject to less regulations than if they take an active role in deciding what content to allow. Moderating Cloudflare would be very expensive so I'm sure they'd like to avoid that.