Could such a AI be reversed, as in basically become a stable diffusion generation of music, with just keywords and a noise generator?
Diffusion currently wont really help with (B) or even (A)... but there is a lot of new experiments going on with (3)... where the decompression using stable-diffusion is providing very interesting results using far less compute... check out JuicyJukebox notebooks (link to come... cant access github colab from my work computer).
Also see OpenAI’s jukebox.