I don't think sqlite would come close to their requirements for permissions or resilience, to name a couple. It's not the solution for every database issue.
Also, the link you provided is for eventual deduplication at the storage layer, not deduplication at query time.
I think you're oversimplifying the problem they had, and I would encourage you to dive in to the details in the article. There wasn't a problem with the database, it was with the query used to generate the configs. So if an analogous issue arose with a query against one of many ad-hoc replicated sqlite databases, you'd still have the failure.
I love sqlite for some things, but it's not The One True Database Solution.
Also, the link you provided is for eventual deduplication at the storage layer, not deduplication at query time.