I guess the trade off here is that your data is still stored in (essentially) plain text on Apple's servers, and they (or whatever authorities) can still rifle through it at any time without telling you.
So you're right that the initial plan is indeed more privacy-friendly, but it has some major future privacy implications that are much worse.
Others providers do it and I don't expect Apple to sit and do nothing about it (governments, ngo pressure, etc.). Something worse is that the Apple brand could be labeled as a "CP enabler" which would very much hurt Apple way more than the current backslash.