> the case is clearly being structured (intentionally by the government, one presumes) to force the test case of "is compelled decryption legal" onto the most unsympathetic possible defendant.

This is called strategic litigation for a rule change and is quite common amongst 'repeat-player litigants'. Prosecutors, insurance companies, and even the plaintiffs' bar routinely take unnecessary cases to trial if they think it would set a favorable precedent and also settle cases where they think a trial might set an unfavorable precedent.