to show users their own games even though
I think the misunderstanding is the context.
If you show the content of a user regardless of any settings or status and block it for other users, that is a shadow ban. Making the user think the content is shown to everyone, while in truth that user is the only one that can see it.
I always thought that shadow banning meant something different. Like silently banning something, banning it by soft banning it, or demoting it stealthily. But apparantly those kinds of bans are a thing on some platforms.
The suggestion is only similar to a shadow ban, since when the adult toggle is set to show, all users see the same. But if the setting would be toggleable and Itch would show the game to a publisher with the toggle set to hide, all users do not see the same - which is technically called a shadow ban if the only user that sees the content is the publisher of said content. That might even lead to concerned publishers contacting support that the nsfw setting does not work for their game, since they can see it right there among the regular horror games...
I would prefer different solutions that do not involve changing appearance depending on who browses the lists and do not lock out user options for user accounts. If this is really about avoiding complaints, that can be approached differently.