Google imposing their own root keys on every device seems like a much much bigger overreach than wanting to repackage apps in their store.

Is it? They control the store, which can install apps remotely, and most developers are handing them their private keys for convenience. You also have to trust that Google gave you the right one every time you install a new app.

What is the practical advantage of having apps signed by long-lived keys that were handed to Google without your knowledge over a Google key bundled with the store?

Either way, you keep the same option of installing an alternate store like F-Droid or downloading APKs if you don't trust Google.