This is wholly speculation, but their view could be that they have two bad options to choose from, and they chose the option that didn't involve congressional hearings and public pressure to make changes that could be even more anti-privacy.

Again, pure speculation and really the most generous means of explaining this controversial decision.

Have you paid attention lately? Politicians only want to react to the lowest common denominator. Your average Joe/Joette doesn't know jack about encryption or hashing. So to them this is just tech mumbo jumbo and "thinking of the children" and they simply won't care that it's 1 step removed government spying. After it happens China has full backend door to upload Pooh hashes to ban political dissidents using memes. Next comes the FBI and CIA with their own hashes to find "the terrorists" and on and on. This is just a toe in the door for governments to abuse the iphone and iphone users and Apple doesn't seem to care.

Much more than brownie points. Apple et al all check CSAM on the server today. If Apple is wanting to announce further e2ee at the next iPhone event, moving a privacy protecting CSAM check to the client is how to stave off encryption destroying legislation.

> They should know this has huge security implications.

I've missed where this has security implications. Did you mean privacy implications?