We use a continuum model to examine the effect of activity on a phase-separating mixture of an extensile active nematic and a passive fluid. We highlight the distinct role of (i) previously considered interfacial active stresses and (ii) bulk active stresses that couple to liquid crystalline degrees of freedom. Interfacial active stresses can arrest phase separation, as previously demonstrated. Bulk extensile active stresses can additionally strongly suppress phase separation by sustained self-stirring of the fluid, substantially reducing the size of the coexistence region in the temperature-concentration plane relative to that of the passive system. The phase-separated state is a dynamical emulsion of continuously splitting and merging droplets, as suggested by recent experiments. Using scaling analysis and simulations, we identify various regimes for the dependence of droplet size on activity. These results can provide a criterion for identifying the mechanisms responsible for arresting phase separation in experiments.