Changeling applies in all zones, not just the battlefield.

Mirror Entity's ability overwrites any effects that previously set a creature's base power and/or toughness. Any existing effects or counters that raise or lower a creature's power and/or toughness continue to apply to the creature's newly-set power and toughness.

Activating the ability with X = 0 will cause all creatures you control to become 0/0 and be put into the graveyard.