The rule in interpreting conflicting statutes of law is that they must be read together, in pari materia, making every effort to harmonize both and give effect to each.
In this case, reading them together yields the result that Congress may not interfere with freedom of the press, or of religion, but may set up the courts as it pleases. If that has the incidental effect of limiting the courts’ ability to handle a particular kind of case, it’s still not prohibited. If Congressional action made it impossible for the court to function at all, then that would, indeed, tread upon the separation of powers.
But you could just as well argue that forcing the Court to exercise original jurisdiction in disputes between states - which is already the case - unfairly limits those sorts of actions. How have we lived with the injustice of limiting cases affecting ambassadors, and ministers and other counsels? All those limitations already exist.
I’m sorry, but that’s simply the way it is. The Congress has the power to control the way the inferior courts are set up. If they wished to eliminate the Eleventh Circuit, they could. Of course, the judges of the Eleventh Circuit would need to be paid and reassigned, because Congress doesn’t have the power to simpy fire a confirmed federal judge. (They may, of course, impeach a federal judge).
In fact, if you need another example to hone your outrage, consider this example: Congress decides that the federal judge that overturned Virginia’s partial-birth abortion ban needs to be taught a lesson, so they impeach and convict him.
What’s to stop them? Nothing. The House has the sole power of impeachment. There is no judicial review. If the House votes to impeach a judge, he’s impeached. Period. The Senate has the sole power to try impeachments. If two-thirds of the Senators vote to convict, he’s gone. Period, end of story, that’s it.
So if you’re going to get worked up about Congress and the President potentially (and unreviewably) changing the Supreme Court’s original jurisdiction in First Amendment cases, consider that the same Congress could, without the President, impeach and remove every dissenting Supreme Court justice in a case they don’t like.