The precedence Apple wants to set is: break ToS, get kicked off the store. Break ToS and then try to take Apple to court, get kicked off the platform.
It's pretty obvious that Fortnite is just the pawn that Epic used to wage war. This is obvious to Apple too, hence their counterclaim for punitive damages.
This is the same concept as tenant rights. Just because you are renting someone's house doesn't give them complete control over your life. A landlord can't randomly barge into your house (even if technically belongs to them) and sell your stuff.
And before someone comments "But there is no tenancy here", well it's an analogy and it's the same idea. The reason tenant rights exist is because we recognize that having a place to live in is a basic existential need for an individual and therefore we place restrictions on what landlords can get away it, despite the fact that being a landlord is far from a monopoly.
Something similar needs to happen for these bottlenecking platforms that are basically existential requirements for a lot of companies. Also applies to payment processors btw.
Epic Games is free to build their own phone and app store platform. There is nothing stopping them. Other than the risk that people don't want to buy into whatever they build. But Apple had the same risks.
If this is truly a good faith negotiation (and not a stunt) on the part of Epic Games, they need to understand they're just losing the negotiation -- that's all. Business is business. Epic Games is just bad at it.
Epic games (AFAIK) started (the public portion of) this conversation by violating terms that Apple set forth in a contract that Epic games agreed to. Apple is defending their contract with their behavior. They have the stronger position unless the law comes to the aid of Epic games (which is what I'm assuming Epic games hopes to induce).
Sidenote: The only law capable of negating a contract is a bankruptcy. Neither party has declared bankruptcy. I have a feeling the law is going to be on Apple's side too.
Apple's other actions are just retaliatory: threatening the unreal engine, terminating developer accounts from affiliates, and yanking Apple login. It's those actions that you shouldn't expect.