From my perspective, it makes no difference to me that I own my iPhone or that Apple owns their iCloud servers, or who really owns what at the end of the day, or at what step the photos get scanned by Apple. It's all the same outcome to me, and I don't really care whether it's being done via hardware or software.
Well based on the rest of your post, you sound like you're in agreement with me that this is not a bad thing that Apple is doing, but many people DO think that it's bad, and are calling Apple hypocritical in light of their strong stance on privacy. Because of that, I believe it IS important to point out the key distinction between files you keep to yourself solely on your iPhone and files you choose to upload to Apple's cloud service. Apple has never claimed files uploaded to iCloud are out of their reach or interest.