Why would they want to entrap people with fake child porn images? What would even be the point of getting people flagged? They would never be convicted anyway, since they are not actually storing illegal images.
What matters is that the person is arrested, that their name is leaked to the mainstream news media, and that they're dragged through the mud - the same as seems to happen in literally every other child porn case.
The actual guilt or innocence doesn't matter at that point. Their lives have been sufficiently ruined, and, if they are actually innocent, the message has been clearly sent.
In any case, the police will not arrest anyone because they have only been flagged by the automatic system. As soon as Apple reviews the images that triggered the flagging, they will see that they aren't actually child porn, and hence they won't even contact the police.
https://nymag.com/intelligencer/amp/2021/08/bitcoin-ian-free...