Use your own router, if you don’t want your traffic/activity watched, you must use a VPN. There are several routers that have built in VPN clients, that should be more convenient then per client VPN.
For reference on what your ISP is using to watch your traffic from the subscriber through the core and to the internet, you will want to read about sflow/netflow, which reads packet headers. Technically, the ISP can capture all traffic and would have the full ability to read unencrypted data. There is also the ability to do MITM TLS shenanigans, but typically you see that at the enterprise level as end devices need to trust the certificate issued to the proxy. Also note that there is such thing as lawful intercept, which in the US means that law enforcement agencies can also snoop your traffic “with a court order” at any point, often without the ISP being explicitly notified.
I agree with everything you said, except the part about babies. They do not care about babies, they care about fetuses, and only fetuses that the mother is considering not carrying to term.