Final answer:
The immediate treatment required for a toddler in severe respiratory distress with low SpO₂ is to administer high-flow oxygen. Other interventions mentioned would follow or be required in different circumstances.
Step-by-step explanation:
The most appropriate immediate treatment for this toddler, who presents with severe respiratory distress, cyanosis, and a dangerously low SpO₂ of 65% on room air, is a) Administer high-flow oxygen. The child's symptoms, including a respiratory rate that has drastically fallen to 10/min from an initially high rate of 65/min, intercostal retractions, and a high heart rate of 160/min, are indicative of severe respiratory distress which could potentially lead to respiratory failure. Immediate oxygen therapy is critical to improving the child's saturation levels and to prevent further hypoxemia and its complications. Option b) Initiate cardiopulmonary resuscitation (CPR) would only be appropriate if the child's heart and breathing have stopped, which is not the current condition. Administering epinephrine or performing a head-to-toe physical examination, while important in specific circumstances, would not be the immediate interventions for a child in acute respiratory distress.