I have to imagine that on routers where the ISP offers a parallel portal through your gear, they isolate the other user’s traffic from your home network and will trace any illegal activity back to that particular subscriber.

Granted, this is probably a good reason to ditch your ISPs hardware and use your own where you can. Even AT&Ts gear can be set up in bridge mode to where it acts as simply a modem for your own hardware. Like hell if I want random people posted up outside my house to use the internet.