How do we respond to someone who uses God's descent to the lowest heaven as proof that God has the ability to enter and dwell in His creations?

This belief is corrupt and stems from ignorance of Allah's power and attributes. Allah's power does not relate to impossibilities in themselves, such as a partner or a son, because these are imperfections that do not befit Him; rather, His power relates to possibilities. Their belief that Allah's descent is like His mingling with creation is ignorance of His saying, the Most High: (There is nothing like unto Him). So His descent to the lowest heaven does not resemble the descent of created beings, and the same applies to all His other attributes.