The fact that they've decided to move this processing from their servers to the local device means they 100% intend to scan all of your photos and not only those that you upload to iCloud in the future.
However... yeah. This is a massive breach of trust. Having any spyware agent on my device is disgusting. I can't imagine the abuse cases this sort of thing can be used for.
https://www.reuters.com/article/us-apple-fbi-icloud-exclusiv...
https://nakedsecurity.sophos.com/2020/01/09/apples-scanning-...