Every customer facing ISP that operates in the area of that IXP yes.

>So then I send my traffic over AT&T's line to NYC where AT&T connects to an IXP

AT&T has no obligation to provide you with that transit. It just has to accept traffic at your IXP and deliver it inside their network, not to other IXPs. To make it even fairer to large ISPs you could even say that they only have to deliver it to the part of their network covered by the IXP where you inject the traffic.

>and each ISP at that IXP has to pay AT&T for access to AT&T's backbone.

I don't follow. What's forcing them to pay anything? Definitely not my peering rules. If AT&T has decided to transit traffic between IXPs the ISPs are definitely not being forced to pay for it.

Here's a more descriptive version of my proposal. All customer facing links need to be connected with free peering to a regional IXP, making the last mile net neutral. To get actual global routing of traffic you need a route to all IXPs in the world. You can build infrastructure to every IXP in the world yourself or you can pay a transit provider to do that for you, possibly in coordination with other transit providers. This way ISPs can't use their last mile monopoly to extract rents and there's still competition between transit providers to create good backbones.