All they would have to do to comply with this rule is to allow people to install apps not served from the App Store, much like Android already does. Seems like a simple enough request, and would only benefit users.
In theory, it is a simple enough request. In practice, Apple has been doing a lot of things (e.g. the new subscription model and in-app purchasing rules) that only work because Apple is the sole source for iOS apps. Changing that is unlikely to be easy for them.
Not true. Look at the mess windows is in because of bad software.
If you've ever had to help a non-tech-savvy user who has messed up their computer by installing bad software that was recommended to them by a well meaning friend, you'll know that there are real benefits to the app store model.