If they want average people holding thinner phones, they would build-in the protective case themselves. It will be thicker than without it, but thinner than third-party wrappers (which is the common case nowadays anyway).
I, too, don't believe much is impossible so far as software is probably the most abstract and malleable construct that Man has devised and created. I say that with a huge caveat though; when someone asks if I can add a feature or write a piece of code my response has always been "with sufficient motivation and time anything is doable". That being said, while I usually _start_ with "yes", many things come down to "I can do this, but it's not worth doing" or "I can do this, but something else is shipping late". That's the nature of the game.
As an example, I tried to explain to someone earlier today why trying to do high end DSP apps for Android phones would take massive resources due to the engineering envelopes that are inherent to the system (high level, JITted language with GC, multiple hardware profiles with a short life span, and the need for low level access on a platform where you're on top of many layers of abstraction makes for a lot of interesting challenges that would devour resources). I'm not saying it can't be done, but I surely wouldn't invest in it.
When their next waves of movies are boring and meaningless and Americans watch movies from the new studios made up of ex-Disney employees, we will see this move hurt shareholders.
Lots of ways, from operating on an NFS or remote FUSE mount of some type (like SSHFS).
In any case, I'm SURE when my contracts are over that my code is deleted because I don't want to be the source of a leak.
16.5 feet in the Twilight Zone = 1 Rod Serling