> Security should always be considered with what can technically could be done given the current code/permission/etc. Anything else is piss poor security practice.
Yes, "considered", not "assumed and banned on the basis of". If I consider what the app could do and chose to accept that risk (hint: you do that every time you install a program on a desktop OS, which have basically no sandboxing and often auto-update), I should be able to use it. Google is doing the deciding here and that's not ok. "There's nothing stopping the devs from abusing this access in the future" is a reason to be careful, not to completely disallow a piece of software (which is what Google effectively did).
> Google is not forcing this app to call themselves "malware"
Many people on this very forum regularly claim that software that does things like upload your contacts to the cloud for no good reason should in fact be considered malware. An app that explicitly brands itself as privacy-friendly being forced to claim it does something that violates user privacy is largely comparable to being called malware.
Let's try this analogy again: imagine Signal needs to call itself "not actually encrypted messenger" because they could in theory push an update that sent messages unencrypted or even forwared them to the NSA - they have all the required permissions!