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1. Is this proactively monitored for? And how? And by whom?Yes, security researchers like myself are constantly looking in CT logs for suspicious certificates, and I've found many, most notably Symantec issuing certs for example.com (https://groups.google.com/g/mozilla.dev.security.policy/c/fy...) and Certinomis issuing for test.com (https://bugzilla.mozilla.org/show_bug.cgi?id=1496088). Both CAs were eventually distrusted. (But Certinomis will be back once eIDAS is adopted!)
Domain owners can use Certificate Transparency Monitors to learn about suspicious certificates for their own domains. Here are some monitors:
https://crt.sh/ - allows you to search for certificates for a domain
https://github.com/SSLMate/certspotter/ - open source tool which notifies you when a certificate is issued for one of your domains
https://sslmate.com/certspotter/ - commercial service that does the same, operated by my company
> 2. If a major state-level CA was discovered to have issued a mitm cert, would browser vendors really take the commercial hit of removing or distrusting their root cert?
In 2017, Chrome and Firefox distrusted Symantec, which was at the time the world's largest certificate authority: https://security.googleblog.com/2017/09/chromes-plan-to-dist...
Symantec hadn't even issued MitM certs - they were just grossly incompetent. Distrusting them was very painful, but necessary to uphold the integrity of the CA system, and demonstrated conclusively that there is no such thing as a too-big-to-fail CA.