Set aside all the technical aspects of this situation, the privacy arguments, the legal justifications, etc for just a moment.
This is becoming a slow roll public relations disaster for a company that touts privacy in it's advertising. We can sit here on what is a fan boy tech geek web site and argue all the technobabble we want about on device, off device, this scan, that scan, hash, human review, cloud, no cloud.
All people who care about privacy hear is that Apple is going to scan their photos. All the iCloud on/off is techno mumbo jumbo to them. It's all static. People don't have time to do a deep dive into stuff like that. They're too busy watching Beat Shazam or Hell's Kitchen and eating pizza.
When the tag lines in your advertising are:
"Privacy. That's iPhone"
"Privacy is King"
"We're in the business of staying out of yours"
and
"What happens on your iPhone stays on your iPhone"
And people PERCIEVE that's not the case, that's a PR and a brand image FAILURE.
The technological or the moral reasons do not matter at this point. This is becoming a colossal egg on face moment for Apple, and they seem to be in denial about it.
Time to punt. Knowing when to make a stand and when to fold is important. Apple should quietly back away from this for now. Maybe regroup and work with other providers to come to an industry wide standard on the issue so they're not set apart like they are now.
They're making a mess of it, which is not what I would expect from the world's most valuable company.
Why make a huge drama out of something that's very simple? Nobody is looking at your photos.
Privacy doesn't give anyone the right to commit a crime.
People do deserve their privacy. This is not like having a camera watching their every move. It's just an AI filter that checks for illegal images, images used to commit a crime. If it finds any, it will raise a flag.
Apple is trying to protect themselves from being accused of protecting criminals and getting involved into a lawsuit.
There are people who think that by using an Apple device they can take and store illegal pictures.
Governments want Apple to create a backdoor, something that would affect the security and privacy of the devices. What Apple is trying to do is implement a non-invasive way to help combat crime, so certain governments and haters don't complain that Apple protects criminals.
Maybe as you suggest, Apple should put this to rest, and let people continue with their business causing pain and suffering to helpless children. It may not bother some people at all, until it happens to someone close to them. Then they will be actively in favor of what Apple is trying to do here.
Just like with the use of a face mask. People are complaining saying "is their body and their right not to wear a mask", without any concern for the people around them. The mask is to protect those around you and protect yourself.
Same thing in schools now, Mothers against having their children wear masks "because is their right not to do so". This is ridiculous!
Just wait until they or their children get sick with COVID-19, their mind will change and will be rallying in favor of wearing the mask. It's already happening, just search in YouTube. Many of those against it, or those who used to say that COVID-19 doesn't exist, are now pleading to people to take it seriously.