I don't think they are gutting anything. They are simply trying to work around the Supreme Court's botched decision in Quality King.
Until I read Quality King, I had no idea that the section 6xx limitations on importing had any connection to the section 1xx exceptions to 17 USC 106. And I doubt that Congress had any idea there was a connection, either.
The 9th Circuit is trying to find a way to read section 109 so as to undo Quality King and get back to what Congress intended--unauthorized importation of copyrighted works, other than for personal use, is prohibited.