At this point Apple should release an phone which has an M2 chip and runs full blown OSX but with a phone sized form factor. Then just port a phone app and have some touch enabled features for developers to design a UX for phone sized screens.

Maybe call it the MacPhone Pro and have the same level of security/customizability/install your own store as a full Mac.

That way Apple can keep the iPhone/iOS branding as the OS for customers that just want a phone that works, is fully iOS wall gardened and don't want to tinker/potentially see blue screens.

Then let the market decide. Perhaps the MacPhone would actually be more popular.