1) Even though the Tax Court's vehement 15-0 decision makes the appeal look, at least initially, like a big uphill climb, appealing it might make sense even if the government is pessimistic, rather than optimistic, about its prospects. When a unanimous 15-0 Tax Court throws out the regulations in a key area, the IRS really can't just "non-acquiesce" and move on as if nothing important has changed. As a practical matter, they need to either (a) get the decision reversed, (b) rewrite the regulations, or (c) accept really bad results as par for the course. Arguably the most parsimonious response is (a), since even if they lose they can still do (b).
2) Even if they win this case on appeal, they ought to revise the transfer pricing regulations so that the ridiculously outdated "arm's length" approach is not lauded up front as appropriate in all cases.
3) I would consider joining a suitable amicus brief that supported the government's position on appeal. I don't have the time to consider leading such an effort, but I'd not only sign such a brief if I agreed with its analysis, but I also would be willing to contribute to a collective drafting effort (assuming that the participants found sufficient common ground). I think such a brief should raise, not only the section 482 issues that are most directly implicated, but also the potential ill effects of effectively telling the Treasury that it must henceforth write regulatory preambles as if they were litigating documents.