You're on the right track but you don't go far enough. The horse is already out of the barn. The freedom infringing laws are in place and citizens and LEO's are used to them. Many people have lived for so long with them that they think it's normal and might even be dangerous if all the damage from federal meddling were reversed.
So my proposal is that federal highway funds will continue to be doled out for a couple more decades, but with a twist. To qualify, a state must return their laws to the level they were at before federal incentives were in place. For example, if a state had a seat belt law before the feds started paying for it, they can keep it because they wanted it themselves. But, if they enacted one after the feds started paying, and it's been in effect for 25 years, then they must repeal it and leave it repealed for 25 years, to reverse the brainwashing effect the law may have had on the LEO's and citizens in the state. Once they have had a chance to see the real cost/benefit ratio of the law, they can put one back in place if they want it, but no money taken from the citizens of the state will be used to brainwash them and coerce their legislators. The same would apply to BAL limits, speed limits, helmet laws, etc. Note that any state where the political will existed to do this before federal meddling could keep the laws they enacted, this would just be a way to undo all the damage that's been done by the feds.