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In single sheets of graphene, vacancy-induced states have been shown to host an effective spin-1/2 hole that can be Kondo-screened at low temperatures. Here, we show how these vacancy-induced impurity states survive in twisted bilayer graphene (TBG), which thus provides a tunable system to probe the critical destruction of the Kondo effect in pseudogap hosts. Ab-initio calculations and atomic-scale modeling are used to determine the nature of the vacancy states in the vicinity of the magic angle in TBG, demonstrating that the vacancy can be treated as a quantum impurity. Utilizing this insight, we construct an Anderson impurity model with a TBG host that we solve using the numerical renormalization group combined with the kernel polynomial method. We determine the phase diagram of the model and show how there is a strict dichotomy between vacancies in the AA / BB versus AB / BA tunneling regions. In AB / BA vacancies, we find that the Kondo temperature at the magic angle develops a broad distribution with a tail to vanishing temperatures due to multifractal wavefunctions at the magic angle. We argue that the scanning tunneling microscopy response in the vicinity of the vacancy can act as a non-trivial probe of both the critical single-particle states and the underlying many-body ground state in magic-angle TBG.