The description for the Magic Fish of Mutation says, "With this fish in your tank, pregnant fish have a chance of producing a baby not related to either parent!" The key word there is chance!

What I've generally seen with the Magic Fish of Mutation is that the mutations are fewer and much more subtle than when using the Unknown Chemical from the store. Out of an entire tankful of babies, you might see only one or two small mutations - for instance, one of the babies might have a different fin type. The interesting thing about the mutations that you do get is that when you examine the mutated fish using the Species button, it will list the parents that would have produced that offspring - not the actual parents that produced the mutated fish. If you're keeping track of breeding on a grid or database, that can be useful information.