TLDR:

That battery is too high voltage and its current (mA) is unknown. mAh makes no difference, in regards to suitability for safety/compatibility.

I will give this a go since the other answers all contain incorrect information.

As @Tetsujin says, the voltage is wrong: 3.7v is 0.7v higher than a standard CR2032. This could cause damage to your AirTag.

Electronic devices operate in a range of voltages. For example when an 18650 battery is fully charged it is at a capacity of 4.2v. When it is half full it might be at about 3.62v. When it’s dead it might be at about 2.75v (these voltages are dependent on the specific model of battery - here I’ve taken the voltages from a Samsung model ICR-18650-22P. Other models of 18650 batteries will have similar voltages but not identical).

Devices account for this by using components which are tolerant of a range of voltages, in this example maybe 3-5v (cutting off the use of the device at 3v rather than 2.75v in order to not drain it too far).

For an AirTag, this voltage range appears to be 2-3v - which immediately rules out a 3.7v cell.

As for the mAh rating, as @Criggie points out: the capacity is 5x lower, meaning you will need to remove and recharge the battery 5x as often.

Importantly, mAh is not a measure of the current that the cell can supply - it is a measure of its capacity (how long it will last before needing recharging) - so this does not rule out that cell.

You would however need to check that any cell can supply at least the same number of mA of current (not mAh).

To touch on a point raised by @RohitGupta, CR2032’s use Lithium nowadays - here is a photo of Duracell’s - note the “Lithium” in the bottom-right corner:

So his point about Lithium mining is moot.

Additionally, battery chargers (as well as cellphones etc) detect when a cell reaches its target (maximum) voltage and disconnect the charging circuitry - so leaving a cell on a charger “too long” shouldn’t matter. In the case of cylindrical cells often this is done by the charger measuring the physical length of the cell when you pull back the slide to insert it.