Daniel, I get that you are upset about this, and you should be. But I fear you are still not getting what I'm saying.
This isn't about breaking the encryption on the phone. Apple can create any kind of encryption they want, and it will still be worthless. Why?
1. APPLE CAN LOAD CRIPPLED FIRMWARE ON YOUR PHONE!
2. APPLE CAN DO THIS ANYTIME THEY WANT!
3. APPLE DOESN'T REQUIRE YOUR PERMISSION!
This is a known and documented fact. Anyone who tries to dispute it need only go look in Apple's support forums where people are complaining about getting forced system updates while e.g. roaming in a foreign country and having to pay outrageous data charges.
Apple's response is disingenuous. They are saying they don't have the capability to do what the government wants. As a statement of fact, it is both completely accurate and completely beside the point. Apple simply hasn't written the binary the government wants yet, hence they don't have the capability to give the government access to the data. However, Apple most certainly DOES have the capability to write the binary and put the binary onto the phone.
Let me see if I can make this simpler:
1) I buy a phone. It has a perfectly legitimate, healthy, non-backdoored version of iOS on it.
2) I go through the steps necessary to encrypt my phone.
3) Apple builds a compromised iOS with a back door in it and then pushes it to my phone. Refer back to what I said above: APPLE CAN do this, ANYTIME they want, WITHOUT my permission.
4) Now, anyone who knows that my phone has a back door can attempt to crack my encrypted data.
Apple didn't give away the keys to my encryption, nor did they actively compromise my encryption. All they did was upload a compromised binary that allowed someone else the attempt to crack my encryption.
At this point, all bets are off: ANY ENCRYPTION CAN BE CRACKED.
As long as APPLE possesses the ability to push firmware to my phone any time they want, they can do whatever they wish with 'unbreakable' encryption and in the long run it won't matter.
Yes, modern encryption methods are very sophisticated and VERY hard to crack, but that doesn't mean that someone with sufficient motivation and access can't do it.
The greater wrong here is not that the government asked, but that Apple even has the ability to do this. Forget the government for a moment; with sufficient determination, a Bad Guy could push out an update that could compromise a great many Apple iPhones. In principle, the government could do this themselves, and you can bet that after this public fracas they are going to be looking into exactly that. What Apple are doing here is a classic PR misdirection campaign, getting people mad at the government so no-one considers that Apple are guilty as sin here as well.
BTW, while Apple are the ones being picked on in this particular case, they are by no means the only company guilty of this; pretty much EVERY cell-phone is a potential security nightmare.
