Would a “Bitcoin-only” economy be more stable or more volatile than the current fiat system?
It's more volatile. And this is the reason why most governments don't want to fully adopt Bitcoin because of its nature.
Highly volatile and then decentralized. A government that controls an economy won't allow this to happen even if the majority of the citizens would take a vote that they're willing to adopt it.
While the fiat system is made by them and they have more control over it. A Bitcoin economy is ideal and promising but just like El Salvador, they have adopted BTC but can't leave the fiat system as other countries might condemn them for that decision and put sanctions.