So the real question is when does this happen? Will Congress get involved at the behest of the Justice Department and mandate access? If so, how long before phone companies are required to lock out devices running a version of the software that does not comply?
I still want an erase/panic code for my phone, both through pass phrase and touch sensor. That way I could hand over an unlocked phone that is effectively returned to manufacturer specs.
The powers that be would be highly unamused. It would make for some interesting case law.
If they appeal, it'll go to a higher court which could overrule the lower court. If a higher court refuses to hear the case (as the supreme court often does), then the ruling of the highest ruling court stands.
The law is vague because current laws were written by people who didn't understand the tech or were writing to govern or regulate a different technology entirely.