I'd be curious why they think consulting the Mercurial source code would make the compatible implementation have to be GPL.
Of course, rather than just go ahead and look and then write a compatible implementation from that knowledge, if I needed such a thing in a proprietary product, I'd pay a third party to read the Mercurial source and publish a specification of the file format, protocols, and rules for manipulating the repository (e.g., rules for locking things, and such). Then I'd implement from that specification.
That should avoid any confrontation.
There seem to be quite a few open source or free software projects where the developers think the license has more power than it really does. The reality is that all open source or free software licenses, even the more restrictive ones like GPL, will in fact let people do some things with one's software that one might not like. That's because these licenses are all based on relaxing the exclusive rights of the copyright holder. Unlike the typical proprietary software license, they aren't a mix of relaxing rights of the copyright holder and restricting rights of the user.
Hence, if someone, including proprietary software companies, wishes to do something with with the code or the knowledge embedded therein, and what they want to do is something that doesn't require permission under copyright law, then they are free to do it.
Personally, this is one of the reasons I have used the two clause BSD license for my recent works. People are going to find ways to legitimately do things I might not like. Instead of going with a restrictive free license like GPL and fantasizing that nothing bad can be done with my code and then being disappointed and pissed off when they do, better to just realize the price of giving users freedom is that they might do things I don't like, and not worry about it. Hence, BSD--the release and forget about it license.
What I find kind of funny (hilarious, actually) is that the kind of protection that some developers wish to achieve IS actually available--via patents! The Mercurial developers can get what they want out of GPL by patenting their repository format and their protocols, and then making a free patent license available to implementations that use GPL.