What are the implications of this for GrapheneOS? Because it’s based on android, will that project die off?

They can choose not to enforce it. The problem is that both Google and other phone manufacturers are making custom ROMS more difficult (restricting access to binaries needed to get the phone to work, not providing bootloader unlock etc). The other issue is if governments choose to go after them. Some police services are already trying to equate custom ROMS, and in particular GrapheneOS, with criminal drug-dealing gangs.

No, GOS is fine.