They had two paths to comply with the law. Silently backdoor the worldwide cloud serving every Apple device, or loudly tell people in the UK they don't get to have security because their government prohibits them. Between these two options, this is clearly "making a stand".

It's not as much "making a stand" as telling a major government that you have substantial seizable assets under their jurisdiction who is a major market you want to be in, that you're not going to do the thing that their laws say you are required to do, but it's hardly simple compliance either, instead of doing what the government wants them to do, they are making sure there is blowback.

Whether to try to fight it in court likely depends on details of case law and the wording of the laws they'd be contesting, I imagine much of the delay in their response to the demand was asking their lawyers how well they think they would fare in court.