Maybe I am missing something here, but the Washinton Post says "Federal prosecutors stated in a memo accompanying the order that the software would affect only the seized phone". What is so wrong with that? If they just use it only on this phone? Or is that the weapon has been created and could be used?
Apple is sayong that the federal prosecutors are wrong in this assertion.
Apple is saying that any solution that is applied to specifically this phone can trivially be generalized to all other iPhones (or, at least other iPhone 5cs). Further, unlocking this phone in response to this order establishes a precedent that this is okay. You are much better off legally if you fight the first request than if you fight the thousandth request.