I can believe that a couple of false positives would inevitably occur assuming Apple has good intentions (which is not a given), but I'm not seeing how thousands could be wrongfully prosecuted unless Apple weren't using the system like they state they will. At least in the US, I'm not seeing how a conviction can be made on the basis of a perceptual hash alone without the actual CSAM. The courts would still need the actual evidence to prosecute people. Getting people arrested on a doctored meme that causes a hash collision would at most waste the court's time, and it would only damage the credibility of perceptual hashing systems in future cases. Also, thousands of PhotoDNA false positives being reported in public court cases would only cause Apple's reputation to collapse. They seem to have enough confidence that such an extreme false positive rate is not possible to the point of implementing this change. And I don't see how just moving the hashing workload to the device fundamentally changes the actual hashing mechanism and increases the chance of wrongful conviction over the current status quo of serverside scanning (assuming that it only applies to images uploaded to iCloud, which could change of course). The proper time to be outraged at the wrongful conviction problem was ten years ago, when the major tech companies started to adopt PhotoDNA.
On the other hand, if we're talking about what the CCP might do, I would completely agree.