In Japan, a bicycle with no functional pedals is called: a broken bicycle.

A bike with a motor which propels itself is called: a motor bike.

Japan has had bicycles with electric assist motors for 10+ years. They are popular with moms who need to carry kids but where a car is too cumbersome.

Japan has also had motor bikes for a century. They are popular with lower class workers who want to skip traffic jams and commute cheaper.

Japan is not confused by the shape of a motor bike. Making it look like luggage does not make it luggage (with a motor) but rather a luggage shaped motor bike. Japan appears to handle this Nominative determinism issue quite well.

What really happens is people like my friend make their own ebike that is super powerful but looks like a normal bicycle, and while it is against the rules nobody ever questions it because it looks like a bicycle.

Looks like it was relaxed in 2008 to up to 200% of input at up to 10kph/6mph then taper to zero at 24kph/15mph, yeah it is kind of restrictive.

I think equal power part is not too complicated to implement, with a load-bearing "just" you just sync synchronous motor driver to the rotor phase and limit current upstream. I believe a prototype also has to be brought to some office to get certified. Frankly it's all par for the course for a Japanese regulation; engineering cost is considered free and everything is supposed to be approved by someone official-ish.