If it has that much interest, someone will put it on GitHub and maintain it. Of course, it'd be unofficial, but so was support for MP3s in Linux distros for many years: you had to download software from outside the US to make it work.
Incompatible licenses would mean that no distribution would have kernels that support it, though. It would be a second class citizen, compiled via DKMS or something, and often broken on a lot of hardware.
The difference to broken MP3 support is that if your music file does not play, you can still browse the Internet and write emails and play games, but if your graphics driver is busted, you can do none of those things from GRUB menu. In the worst case recovery mode does not work either, and you just converted your laptop into a headless server.
Troubleshooting it by browsing instructions on the mobile is no fun.
Why would the licenses be incompatible? AMD owns the code, so they can release it under whatever license they want, including GPL or BSD. They could even put into the public domain if they wanted. AFAICT, the code has not been released at all, so this point about licenses is simply wrong: it doesn't have a license at all right now.
As for a broken driver, that's an easy fix I think. From my reading of the article, there's already an existing driver, but it doesn't support HDMI 2.1 features. So it's simple: provide a fall-back driver, and require users to separately download the new driver (or maybe distros can package it themselves, I'm not sure about the legality). If something goes wrong with the unsupported driver, leave an option in the boot menu to boot in a "safe mode" that uses the old driver. So they won't get 4K @ 120Hz, but I'm sure they can live with that.
Exactly like you are saying, if I'm not misunderstanding the situation: the code is unlicensed for anyone who is not AMD. That is incompatible with GPL2 license of the kernel. Without HDMI Forum's approval it can not be licensed, either, since the point is that AMD does not own the secrets contained within.
(If the driver is leaked, I would imagine it to be illegal to distribute it. Companies might elect to not actively support even the fallback mechanism, if it has no other use cases. Probably not a big hurdle and something an installation package should be able to solve, but a hurdle nevertheless.)
>(If the driver is leaked, I would imagine it to be illegal to distribute it.
How so? This would be a 1st Amendment issue: you can't ban free speech. They tried this with deCSS, which could be printed out on a T-shirt. Of course, if it were leaked, it could be called a copyright issue, but copyright claims require the copyright holder to actively pursue those claims: if AMD didn't bother to pursue any claims, then what could anyone do about it?