The end of RFC854, the very last paragraph, states:
https://datatracker.ietf.org/doc/html/rfc854
Port Assignment
When used for remote user access to service hosts (i.e., remote
terminal access) this protocol is assigned server port 23
(27 octal). That is L=23.
I would say that by the letter of the law, and by longstanding convention, that port 23/tcp is given to telnetd type login servers. A server listening on port 23 is expected to accept login credentials and furnish a shell or some management interface that affects the host itself. That someone would log in as a terminal user and perform computing tasks.A MUD game could never be confused with managing the server where it runs, or a user/admin login to access that operating system. A MUD game has a specific purpose of recreation/leisure/communication.
Again, let us not conflate port 23 with telnetd with the TELNET protocol. These are all completely separate and distinct. Except that port 23/tcp implies TELNET protocol and also implies a telnetd-type server. It is sort of a one-way chain of requirement. telnetd could be run on any port (inadvisable) while TELNET protocol could be implemented by any other service (often preferable).
A MUD server is perfectly entitled to use TELNET protocol! In my server-hacking days, I often considered it a mistake and error not to support TELNET protocol! If I had known how to implement it, I would've added it to TinyMUCK myself! Honestly, it was not a priority because there was no known client supporting TELNET, either. Of course, protocol support needs to be on both ends to be effective. Without demand or capability from clients, it didn't really make sense for server programmers to add it in.
But we were perfectly content to stay on port 2283, port 4201, or port 6250, as our players and Wizards had established the games to run there, especially in those days we wished to escape notice by admins. The TELNET protocol can run on any port and support any "network virtual terminal" service. But the "telnet port" on 23 is special, unique, and as of last month, really inadvisable for everyone.