They are now scanning on the device. Regardless of how limited it is in its current capabilities, those capabilities are only prevented from being expanded by Apple's current policies. The policies enacted by the next incoming exec who isn't beholden to the promises of the previous can easily erode whatever 'guarantees' we've been given when they're being pressured for KPIs or impact or government requests or promotion season or whatever. This has happened time and again. It's been documented.
I really am at a loss how you can even attempt to be fair to Apple. This is a black and white issue. They need to keep scanning for crimes off our devices.
So to your answer your question, yes it is preferable to have them be able to scan all of the unencrypted photos on iCloud. We can encrypt things beforehand if need be. It is lunacy to have crime detecting software on the device in any fashion because it opens up the possibility for them to do more. The people in positions to ask for these things always want more information, more control. Always.
The above reads like conspiracy theory but over the past couple of decades it has been proven correct. It's honestly infuriating to see people defend what's going on in any way shape or form.