Yes, this is a problem, because it would mean that if the President (for simplicity, the order also specified the AG, but it doesn't really change the issue) had an opinion on the law, and the courts issued an order to an executive officer such as a department head in a lawsuit contrary to that interpretation, the department head would remain bound by the Presidential interpretation until the President relented, since the meaning and effect of a court order is no less a matter of interpreting the law than the meaning and effect of a regulation, statute, or Constitutional provision.
Sec. 7 is so ridiculous on its face that, while I am sure the Administration seriously does want to impose as much of this control as it can get away with, I think it was largely included as a lightning rod to distract from the rest of the order moving control of all independent agencies internal spending allocations into OMB and the Executive Office of the President and otherwise purporting to transfer effective control of the functions assigned by law to the independent agencies to be exercised by their boards into the White House.