It'll grow, however over time the mulch will tend to decay away and settle. That tends to lead to a depression where the tree used to be, which can get water-logged and be somewhat of a challenge to mow.

For a modest period, grasses in that area may also be a paler green and not as thick as other grass. The mulch, while decaying, is sucking nitrogen out of the soil (plus other resources), denying it to the grass. This is only temporary and will reverse once the mulch is gone.

Leveling ground after a tree removal can be a real pain. Even top soil settles a little.

Thanks for your reply. I didn't realize that the mulch would draw the resources from the soil. I guess I will need to add more top soil as the time goes on until the mulch has decayed. As for the depression that may start to appear, that might be more of a challenge.