If someone reports you, they (the people receiving the report) will be able to read the messages. This is the same if you use iMessage, Signal or any other system. (ie you take your phone to the police and show them the messages, they will see your messages, obviously.)
The key difference is that facebook has a button to report the message to them.
Facebook is not a recipient and therefore should not be able to read e2e messages (that are not directed to them)
Edit: I just read that the reporting process includes sending unencrypted messages to WA as part of the report. So indeed the whole story is moot.
Of course there's a bit of a sliding scale here. If the recipient automatically and unknowingly sends all past messages to the cops when they try to report a single abusive message, it's not E2E but it sure is a back door. It's not clear from the article just how much history is sent with each report.