Earlier quoted context omitted.
Am I the only one paranoid enough to think that this means Apple is now indexing even the text content of images stored on it's users computers?
That's literally a feature of the platform. If you open the photos app and type text in it will give you the photos containing that text. If your concern is "apple is harvesting my data" then no. All of apple's various analysis systems ("AI") are entirely local. This does mean you get a bunch of duplicated work as every device redoes the same analysis but on the other hand it saves you from "how do we defend against…
Even if that were true (I couldn't say, and I don't think anyone who doesn't have access to Apple source code and production systems could either) that wouldn't preclude Apple harvesting the results of said AI analysis.
In fact, doing the analysis on users' devices would represent a shift of that processing from cloud to edge, representing a significant savings for Apple or anyone else in a similar position.