Either your router, firewall or modem still has to process every request. The reason a DDoS works is because the device in question receives too many requests, and eventually has to throttle (for lack of a better term).
Even if you "block" the IPs, your device still has to read the IP -or- the packet data, depending on the type of block you use, and then decide what to do with it. When you've got hundreds of requests coming in at the same time, it's simply not possible to continue normal operation until you clear all the requests.
This shield couldn't operate instantly. It would have to wait until the majority of packets are cleared, and then it could potentially fire a counter-attack, but there lies another problem.
DDoS = Distributed Denial of Service attack
DoS = Denial of Service attack
If somebody is hitting you with a DDoS, they're using multiple servers to hit a specific target. It's basically multiplying the power. If you have one device, this counter-attack is going to be a DoS, which would take far longer, has less power and can be resolved faster.
Good try, but this device would not work at all.