Bitcoin's security would be impacted and people would lose trust in the network. However, the solution proposed in this BIP doesn't increase trust in Bitcoin either. It doesn't look trustworthy if a decision is made that your coins will become non-spendable in the future.
I believe this is why Phase C was proposed:
Users with frozen quantum vulnerable funds and a HD wallet seed phrase can construct a quantum safe proof to recover funds.
This phase is designed to preserve trust in Bitcoin by ensuring that users don't permanently lose access to their funds.
I think phase C should be mandatory rather than optional, as it provides a safeguard that maintains the network's trustworthiness while addressing quantum vulnerabilities.