I can't see how the distance to a quasar can be measured according
to redshift. i.e. Spectral lines generated within a black hole (if
there were such things) will always be gravitationally redshifted
by 100%,

No light escapes from within the event horizon. All observed
emission has to come from outside it.

and spectral lines from matter orbiting the black hole
will be gravitationally redshifted enormously.

The broad lines arise tens to hundreds of light-days from the black
hole. A good reference is at
https://ned.ipac.caltech.edu/level5/...on/frames.html

I leave it to you to calculate the gravitational redshift.

The narrow lines come from even farther from the black hole and show
nearly the same redshift as the broad lines.

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