So either we take this approach, or end up with a worse one, like pure on-cloud scanning with no transparency whatsoever.
I read the technical paper today, and this solution is super clever, well considered, and checks just about every box a crypto-solution-phile would want. I don't know how it gets better than this. (Technical note: Apple's solution on this requires client and server communication to flag an image, which is part of the reason it's totally off if you turn off iCloud Photo).
If this opens the door to Apple offering E2EE on all photos in iCloud (which it could), then this ends up being a big win over the status quo, in my opinion. And even if not, there are far, far worse alternatives.
[Edited for spelling].