There are some key problems with this theory about Elsas powers in Frozen. While it has a nice ring to it and adds depth to Elsas struggle it hinges a lot on the idea that Disney movies share a universe.
Easter eggs are fun and they litter Disney films but examining them through a lens that makes them plot-bearing is perhaps overburdening what they are meant for fun reference to other works. Another issue with this theory is that Elsa freely uses her powers until Anna is hurt in the opening scenes of Frozen. This was not something done in secret. Frozen 2 shows her parents looking in on the two playing with Elsas magic and smiling. If her parents were aware of a public stigma against magic and used that as the basis for their decision to sequester Elsa away it does not quite follow that she was allowed free use of her magic until Anna was injured.The revelation that Queen Iduna is from Northuldra and well acquainted with magic is also of note. Magic might have had some stigma in Arendelle but they were comfortable enough with the Northuldra to seek a treaty and make peace.
It does not track that the born Queen of Arendelle would see her daughters magic as villainous. All these things being considered the theory that Elsa was hidden away because people mistrust magic due to how its been used in other Disney properties does not quite ring true. Its a compelling theory and it adds some cool nuance to Elsa as a character. It also potentially contextualizes her parents decision to keep her hidden away which has been a point of some controversy since Frozen first came out. Still the idea that all Disney movies exist in a shared universe is almost requisite for this theory to pan out and the evidence does not quite add up to that point.