Of course it would be possible to implement content search, profiling and reporting mechanisms for such content, but this seems to be a singularly bad platform for that sort of search.
The image profiles are part of the OS so there's no mechanism to deliver image profiles separately for different countries. Also when the threshold number of matching images is reached, the matches are reported to a manual reviewer at Apple not a government. It only checks images on upload to iCloud photo storage.
So of course each of these limitations of the system could be changed, but you'd really need to change all of them and at that point you've created a completely different system. There's no simple change to this system that would suddenly turn it into a snitch for e.g. China or Saudi Arabia.
I've seen exactly the same objections raised every time any kind of device content search has become mainstream. Back in the 90s it was virus checking (Do you trust the AV company? What if they were bribed by the content companies?), full device indexing and search (Do you trust the OS vendor? What if they're in league with the government?). I'm very surprised this didn't blow up when Apple implemented ubiquitous image text recognition. Maybe it did. AV and device indexing mechanisms, which are ubiquitous, seem like a far more vulnerable target for such requirements.
So I don't really buy the slippery slope argument. In theory any government could pass a law requiring any company operating in it's jurisdiction to do anything, with an implementation suitable to that actual purpose. Of course this mechanism is motivated by laws in the US so it's a perfect example of exactly that, and it's a completely new system not a slippery slope subversion of an existing one. The real slippery slope here is legislative, not technical and I think that should be far, far more concerning.
I do think the legal and moral questions about this mechanism are legitimate. I think it would make more sense for Apple to scan photos in their cloud storage on the cloud storage rather than on upload. I understand there are theoretical privacy benefits to users from this implementation but the optics of having user's devices snitch on them are all wrong.