We went through this 20+ years ago when US companies then couldn't export "strong" encryption (being stronger than 40 bits if you can believe that). Even at the time that was ridiculously low.
We then moved onto cryptographic back doors, which seem like a good idea but aren't for the obvious reason that if a backdoor exists, it will be exploited by someone you didn't intend or used by an authorized party in an unintended way (parallel construction anyone?).
So these photos exist on Apple servers but what they're proposing, if I understand it correctly, is that that data will no longer be protected on their servers. That is, human review will be required in some cases. By definition that means the data can be decrypted. Of course it'll be by (or intended to be by) authorized individuals using a secured, audited system.
But a backdoor now exists.
Also, what controls exist on those who have to review the material? What if it's a nude photo of an adult celebrity? How confident are we that someone can't take a snap of that on their own phone and sell it or distribute it online? It doesn't have to be a celebrity either of course.
Here's another issue: in some jurisdictions it's technically a case of distributing CSAM to have a naked photo of yourself (if you're underage) on your own phone. It's just another overly broad, badly written statute thrown together in the hysteria of "won't anybody think of the children?" but it's still a problem.
Will Apple's system identify such photos and lead to people getting prosecuted for their own photos?
What's next after this? Uploading your browsing history to see if you visit any known CSAM trafficking sites or view any such material?
This needs to be killed.