You don't think it's strange for a service provider to tell people that "mercurial isn't suitable for this" (even though it clearly works, and has been working for many years) and "you're writing your program wrong"?

It's fine to not support certain use cases because it's too much effort or otherwise too expensive. It's not fine to, as a service provider, tell people that their programs are (and I quote) "wrong".

If you're okay with that then that's your choice, but for me it really turned me off sourcehut.