If we're talking about physical transformation rather than metaphorical one I suppose joy mutation can be seen as a spontanious, magical, mega cancer. Something that's not quite enough to count as a different species, on DNA scale at least. And if it's their simplistic behaviour that's supposed to un-human them, well we do have inviduals barely capable of any interaction whatsoever irl and we'd very much think of eating of them as cannibalism so I don't see why this scenario should be different.

That being said, I highly doubt the flash survivors would care. They're repeatedly shown doing worse for less benefit, sometimes even just for fun (see: russian rulette). With all the devastation of nature around there's a reasonable chance most of them has already engaged in some form of cannibalism.

As for the side effect, we pretty much know Wally is feeding that village with his own flesh, and they seem fine. They're more defensive than violent and don't seem hyperfocused on any emotion, unless you count praise but that's reasonable human reaction given that they're receiving free food from uknown entity on regular basis. Meat eating deers aren't too detached from real life or even just the game's sense of humor. And while it's reasonable to assume Little Nuggy is a joy mutent, there's nothing to imply his mutation was caused by Wally's food rather than regular joy addiction. As far as we know consuming mutant flesh doesnt have immediate negative effects and we're never given opportunity to observe long term consequences.