Is sort of somewhat handling 10,000 by enabling them to make orbital adjustments more quickly. By the time you have a million, you will run out of prop way too quick.

It would still be a space junk problem. Space is big, but amazingly not that big. If you start ejecting little hot BBs at interplanetary speeds, you are creating broad swath of buckshot that will eventually impact something with the force of a missile. Put millions of these satellites into solar orbits (I’m ignoring the huge increase in launch cost this would require, and all the other issues like latency and comms), and you could very well make trips to other planets impossible.

It wouldn’t be Kessler syndrome as you would not have a chain reaction of collisions, but the end result would be the same.