Does that mean if 100 people send files over a server, and out of the 100 recipients a single one spells the code wrong, all 100 transfers get cancelled?
No, the key negotiation occurs between two clients.
In the Magic Wormhole protocol, the number at the beginning of the Magic Wormhole phrase specifies a "nameplate" used to negotiate the "mailbox" which both clients (sender and receiver) use. If a recipient specifies a _matching_ nameplate but a _non-matching_ key phrase, the file transfer transaction between the sender and receiver with a matching nameplate will fail (since they cannot correctly produce a shared key), but nobody else is affected in any way.
An evil attacker could DoS the magic-wormhole mailbox server by spamming mailbox nameplates with bad keys, since there isn't much entropy at all there, but they would affect only single transactions at a time.
In the Magic Wormhole protocol, the number at the beginning of the Magic Wormhole phrase specifies a "nameplate" used to negotiate the "mailbox" which both clients (sender and receiver) use. If a recipient specifies a _matching_ nameplate but a _non-matching_ key phrase, the file transfer transaction between the sender and receiver with a matching nameplate will fail (since they cannot correctly produce a shared key), but nobody else is affected in any way.
An evil attacker could DoS the magic-wormhole mailbox server by spamming mailbox nameplates with bad keys, since there isn't much entropy at all there, but they would affect only single transactions at a time.