For peers to connect to each other, at least one of the two connecting needs to be port-forwarded, so if everyone were on Mullvad, now no one would be able to reach each other. Right now you can still torrent on Mullvad, but only with (non-Mullvad) users who use port-forwarding.
Sounds a lot like email where it is really difficult to self-host your own email server since you’ll be flagged as spam. It seemed like something that would happen to Lemmy eventually, but I didn’t think it would be a strong possibility this soon.