Re: No, not really
"For the government to ask for the privacy of highly suspected criminals to be denied is within all legal precedence"
That's not the point, and you know (or should know) it.
Nobody's trying to protect the privacy of a dead terrorist. Indeed, I assume that US law is analogous to law in the civilised world like the UK, where "personal data" of a deceased person is explicitly outwith the scope of the Data Protection Act.
The issue is - clearly - about what happens next if Apple does fold, and the implications for the privacy of those of us who aren't criminals/terrorists/dead...