But what I wonder is how they circumvent the entire trust mechanic when the phone is locked. When the phone is locked most of the storage is encrypted too.
I wasn't trying to say they can somehow get your plain text - this is just a copy of encrypted data. What they can do is keep you from tricking them into destroying the data they have.
Yes. The A7 came out after anything I've read on the subject, so it may be more difficult. But really all this means is they need to get the copy without destroying the phone and have some way to put it back. The point isn't to brute force the data somehow, but rather to protect it from being destroyed while the wheels of justice crush you.
I've always thought the way to deal with this is to use a OTP scheme. If you have a one time pad that's as large as your data set (assuming we're talking about some reasonably small number of critical documents here), you could generate the cyphertext from your key and then generate another key that translates your cyphertext into something innocuous - grocery lists or whatever.
There's no way the court could prove the key you gave them isn't the right key.
It'd probably be best to do this on a format that can plausibly have such extra data (assuming you generate more operational data than you do plausible cover data). An encrypted disk file is probably a good bet. So long as it's not too egregious, it'll probably be OK. "Yes I have a 64MB encrypted disk, even though my working set is only 2MB."
But what I wonder is how they circumvent the entire trust mechanic when the phone is locked. When the phone is locked most of the storage is encrypted too.