So, in this case, the phone belongs to a third party - government, no less. I see no reason why they shouldn't be able to see what's in it. If only all public "servants" were held to the same standard...
Now the tool they are asking Apple to create would completely undermine the security of their product. Even if they tried to restrict it to the single phone in this case, once the tool was created, reverse-engineering it to create a tool that would work on any iPhone would be possible. (And we are to trust that the government would not do such a thing, and would make sure the tool never leaked into the public domain - sure!!!)
What is questionable to me is whether it is legal to force a company to create a new version of the a product for law enforcement purposes. They are not asking for access to a backdoor that is already built into the product, or for a tool already in use by Apple - they are trying to force Apple to create a new way to allow them to crack the pin. As far as I know, slavery is still illegal - you cannot force someone to create a new product.
WOW! You found another guy who believes in MAGIC. DiogenesLamp, you cannot load anything on an iPhone until you OPEN it. There is no way to do it. That means you have to enter the PASSCODE to install the software. Otherwise the phone is not RUNNING! That means you have to break into it first to get his special software on it. SHEESH! Not possible.
If you try to load it with the boot loader, the iPhone will ERASE ITSELF!
Did you actually read the article you linked? It says that the court order was to require Apple to make a new version of iOS (which the writer elegantly called “FBiOS”) and install it so that the government can brute-force the password. So Apple cannot provide the encryption key and is being ordered to invent new software to make it easy for the government to hack, just like the article you linked says.
Reading comprehension is your friend...