Microsoft has at least two reasons to develop Office for Macs. One, it keeps the Justice Dept of their backs. Two, they make money.
As for the assertion that Apple is Microsoft's rival, I disagree. Honestly, Microsoft probably doesn't see Apple as a true threat. Google is their current main threat. The only thing that Microsoft is truly in competition with Apple right now is with multimedia formats (i.e. AAC vs. WMA, and h.264 vs. WMV-HD).
Also, if Apple decides to cut off iPods from Windows, they'll instantly lose about $30 off of their stock price. Not to mention 95% of their iPod sales.