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they would be forced to accept it, however they would likely instantly convert it to a more stable currency at the time of payment through some processor.

there will likely be a small fee to them for the conversion of Bitcoin to say, USD, but I imagine it would be similar to accepting credit cards for payment? and so it would be worked into the prices.

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This isn't inherent in the definition of legal tender, for example large denomination paper notes (100/200/500 euro) are often rejected for fraud risk despite being legal tender, and the latter two ceased printing because legal vendors so rarely accepted them meant that illegal activity was a high proportion of their use.

The keyword is “debt repayment”. You don’t owe a vendor money until you purchase a product. They are fully within their rights to refuse to sell you a product for any reason, including how you wish to pay for it. On the other hand, a bank cannot refuse a loan repayment because it is made in 500 euro bills.

Yes, I'd assume that creditors preferring USD would convert but that seems like a non trivial overhead for many creditors. The time between receiving payment and actually converting BTC to USD will surely result in a non-negligible balance difference?

Creditors pay, not debters to convert.

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