This should not (so much) be compared with Fully Homomorphic Encryption (FHE) but with a Trusted Execution Environment (TEE). It is a very elegant and minimal way to implement TEEs, but suffers from the same drawbacks: a data owner has to trust the service provider to publish the public keys of actual properly constructed Mojo-V hardware rather than arbitrary public keys or public keys of maliciously constructed Mojo-V hardware.
[1] https://en.wikipedia.org/wiki/Trusted_execution_environment