Correct. It has plausible deniability built in. Apple is unable to verify that the images the government are looking for are actually CSAM. They could be political. They could be protest images. They could be Winnie the Pooh. Apple can plead ignorance as it blindly scans for whatever the requesting government asks it to scan for.
Nobody really minds that this system is going to be used for CSAM. What everyone recognizes is how ripe this system is for abuse, how easily it can be leveraged by oppressive governments. And Apple can play the innocent.