I think it's much more pernicious than that. It's not just that everyone else might be an NPC, which is bad enough. (Why is it bad? If others are NPCs, what does that do to my ability to be emotionally and mentally intimate with them? To relate to them on a truly personal level? If my kids are NPCs, do I treat them like that? This idea, taken seriously, is horrible for interpersonal relationships.)
But it's even worse. I might be an NPC. If so, I am just a machine, with no true personality of my own. No free will, either. This pushes me towards living like an NPC - just going through the motions, rather than actually living. Even though it doesn't actually kill me, it destroys life.
This stuff isn't just an intellectual exercise. If you take it seriously, it can drain all the joy out of living.