How are their hands tied by Congress telling the FAA what they can and can't do? Congress also gave them a deadline to implement regulations which they did not meet. If I told you that you needed to dig a ditch and that ditch needed to be 10' deep, 5' wide and 20' long, would you say I'm tying your hands?
The FAA continued to flat out lie to people. That is a fact. They spread propaganda to make it look like drones were going to end the world. They then claimed that the registration of drones would solve the problem of matching up illegally flown drones to their owners (yet another lie). They told us that this did not go against the Reform Act... yet they attempted to add in a 400' limit to the registration. The US Supreme Court then told the FAA that they were wrong about the registration that it could not be done.
That is a short list.
Yet you don't blame the FAA? They are trying? You are kidding right? Please tell me that you forgot the LOL emoji in your post.
No, I'm not kidding, and I find your attitude disturbing and ignorant. The protections for model aircraft in the special rule were enabled by AMA lobbying to avoid regulation. When that really only applied to the limited and localized traditional activities of model aircraft use it was, perhaps, not a big deal, even if it was an unreasonably broad exemption. But traditional model aircraft activities have never been much of a threat to the NAS, and so congress went along with it.
That changed with the proliferation of long-range, relatively high-altitude, semi-autonomous consumer UAVs. In place of the enjoyment of flying a model aircraft in controlled locations and fully within VLOS, we now have a much larger and more diverse community of pilots for whom the primary thrill appears to be how high or how far they can go, in polpulated and congested areas, around airports, wildfires, and other "attractions". And the FAA has almost no power to regulate them as long as they are doing that for fun, other than bringing a full on charge of endangering the NAS. They cannot set any specific, enforceable rules.
The deadlines that congress gave the Department of Transportation and the FAA, set out in sections 332 and 334, were to develop plans to integrate civil and public UAS operations into the NAS, not regulate recreational use because, as you keep pointing out, the FAA has no power to regulate recreational use. Part 107 was the initial action in that direction. Their attempt to bring even a semblance of accountability and regulation to recreational use, via the registration process, was struck down, corrrectly, because it breached section 336 of the Act that specifically excludes model aircraft:
SEC. 336. SPECIAL RULE FOR MODEL AIRCRAFT.
(a) IN GENERAL.—Notwithstanding any other provision of law relating to the incorporation of unmanned aircraft systems into Federal Aviation Administration plans and policies, including this subtitle, the Administrator of the Federal Aviation Administration may not promulgate any rule or regulation regarding a model aircraft, or an aircraft being developed as a model aircraft.......etc.
They have not been tasked with implementing recreational regulations - they have been specifically forbidden from doing so, and that is the sense in which their hands are tied. You can whine about the FAA as much as you like but, while they are responsible for the safety of the NAS, they are faced with a growing class of users over whom they have no regulatory power - with only the vague threat of "don't do anything dangerous or we may be able to prosecute you" available to them. That's why I don't blame them for trying to be creative in their interpretation in order to give them some regulatory powers. On this issue they have been set up to fail by congress.