In the extreme, the Government's proposed interpretation could be used to require safe manufacturers to build tools for the government to break into safes with, paper shredder manufacturers to build devices to stick shredding back together, drug companies to manufacture lethal injection drugs they did not wish to, or anybody to do anything that a DA thinks will help advance a case, provided that the legislature has not specifically passed a law prohibiting them from doing so.

This ruling notes any number of absurdities that this would entail. For instance, if congress passed a law requiring companies to provide aid X, and then unanimously repealed that law, the Government could go right on requiring aid X unless congress explicitly passed a law forbidding aid X.

No, if it's upheld and home manufacturers already have a literal backdoor for use only by themselves, a court can force the home manufacturers to allow the FBI to use them as well for specific investigations. The AWA power to compel an action only works when the party being compelled has some special ability to help on a specific case with probable cause (not future cases), as Apple does with its system update backdoor for the San Bernardino and Brooklyn cases.

It's not exactly the situation as I understand it. Apple, with their current software, do not have a way to access this phone. They'd have to build a special neutered version, update the phone with it, then allow access.

That they can do this since they control updates doesn't mean that they have already done it for their own purposes or wish to do it, or should be compelled to build a back door for the government.

That they can do it means they have a backdoor. It doesn't matter if it takes a day to write the code and flash a build to use it — that it is significantly easier for them to access data on the device than it is for anybody else means they have a backdoor.