The reason the recently adjourned Congress extended the certification deadline for MAX 7 / 10 is that the 2020 legislation enacted into law in the aftermath of the two accidents imposed a deadline in the first place. In other words, the legislative deadline was highly atypical, and its inclusion in the legislation in 2020 was the only reason Congress had to act now, in order to allow the process to continue. (It could also have done so retroactively by action of the new Congress convening next week, but that option left lots of uncertainties.)
Relative to the deadline itself, FAA would not have any basis to challenge the extension in court. Can you imagine the oversight hearings? It would be stark political theater especially given GOP control of the House in the new Congress but, no.
As a practical matter, however, ..... well, when government agencies wish to extend their authority, they can (for example) slow their processes to a crawl. Of course in this instance (as previous posts and posters have observed) FAA on one hand wants to appear that it has lost its complacency - if that is the right characterization - but at the same time, the realities of its closeness with the airframer might just be harder to see. And yes, its dual mandate is a long-term issue.
Without the most recent legislative text in front of my SLF/legal counsel eyes, I can't say for certain whether the deadline extension included specific safety-related modifications in order for certification to be approved or what they require - news reports state that it did but tbh there hasn't been a reason to go get the actual legislative language.