Someone who feels comfortable letting a tech company control a microphone in their home (and by proxy all the agencies that company is obligated by law to serve) probably isn't too concerned about the local neighborhood prankster getting in on the action too. I think the great fear they have is that someone will come along and install a daemon on that speaker which charges them rent.

I would be just as concerned - if not more - about Google having access to such a device as I am about some random hacker.

Is the extra 100 bits of security on your cryptography standard what's actually going to stop them?

In reality, most hacks are stopped by stupid stuff, like closing down ports and proper key management hygiene, not by using completely-brute-force-proof encryption standards. I'll make you a deal: do everything else on that compute-limited embedded device to a practically-uncrackable standard, then you can upgrade to 256 bit crypto. Some devices get there, but no consumer electronics.

Encrypting the filesystem on that specific device is also completely irrelevant to my security as a user - it has more to do with Google protecting itself from copies and users being able to add features.

Third parties who want to exploit the relationship between Google and its users are certainly not users. I don't think it's productive to question their intentions. The better question to be asking here is how or why we allowed our homes to become yet another front in the war between Google and its adversaries. Their business model doesn't jive with third amendment culture. I reject any world in which there's a legitimate need for military grade encryption in my home. That is not the future I'm rooting for.