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They did intend that. This email is Bertrand relenting and saying “Fine, let’s enable apps that aren’t web apps.” Here’s what they told developers when the iPhone was released (months before that email): https://youtu.be/vKKISOnOCaw

How is "never the case" derived from this email? This email was sent after iPhone shipped and doesn't say anything about shipping Cocoa Touch as a goal before this point.

Seems like clear case that is _was_ the case, unless Steve Jobs liked to ensure his intended features were very secret indeed, and delivered late.

The email shows literally the opposite of what you suggest

I would argue that this email actually somewhat bolsters the claim of web apps only, so I'm not sure how you believe the exact opposite.

How does this contradict that?

The original iPhone was release in June of 2007, this confirms that the decision to release an SDK was in October of that year. With the announcement to the public being a couple of weeks after this email.