1. Encrypt everything in the cloud but upload the hashes of these items as well on the device. Also notify us so we can notify law enforcement if they're doing some illegal stuff.
2. Everything is unencrypted in the cloud. No actions are taken on the device. No notifications to authorities.
With option one the sanctity of the device ownership is breached. With option two it's maintained. Maintaining that stark distinction is hugely important for what future actions can be taken in the public eye. Normalizing on device actions that work against the user must be fought at every instance they occur.
Your line of thinking dangerous because you're ignoring the public perception of a device you own actively working against you. Apple's behavior cannot be allowed to be considered normal.