The express limitation in the terms of the airspace declaration power is why the band aides are necessary (in the minds of those who can’t let go of the normalised deviation). In effect, the instrument does what the declaration power cannot do in its terms: reach outside Australian territory. CASA’s powers do reach Australian aircraft outside Australian territory.
It will be interesting to see what the amended Airspace Regs say, if and when they are amended. Maybe the delays are because someone made an ambit request to just delete the words “of Australian territory” from the key provision you quoted! That would raise some eyebrows. But as I said above, I’m guessing the primary impediment is that someone did a WTF because the concept does not make sense.
This will never be another Robodebt. It’s all done in the name of the defence of the nation and the safety of air navigation. Most would prefer not to be confronted with the truth about what it actually achieves.