This, to me, would be exponentially less privacy invasive as I’ve come to assume all major cloud hosting providers implement something like this (look at Google Drive), but Apple has said that the scanning is done on-device, meaning whether or not you upload your photo library to iCloud, your local photos will be scanned with an on-device database of hashes.
Essentially iOS photos now implement a direct API call to the feds with some vague “human verification” layer if you go above an unknown threshold