From the numbers that were published, it seems that Cloudflare would've probably handled the attack without outages. They have significantly more PoPs, especially in the regions that were attacked (Dyn has 2 in US-East and 8 in US, Cloudflare has 6 US-East and ~20 in US overall). I think it's unlikely that an attack of 1-2Tbps would've brought them down.

Answering DNS is not very costly, so if you have enough capacity to the servers, answering shouldn't be the bottleneck.

I agree that it's very bold to do that, but I'd trust them with handling DDOS more than most other providers.