I don't think this is really a legal interpretation.

If someone was distributing a password protected zip-file where if I type in "Mickey Mouse", I get a photo of Mickey Mouse, the zip file violates copyright. It doesn't matter that the underlying representation of Mickey Mouse is distorted in storage and recovered later. It doesn't matter that in order to retrieve the image, I have to go through a series of operations.

Of course, if I opened the zip file and put the image on a t-shirt, I would also be violating copyright. But the zip file itself is copyright infringing.