> If this phone instead belonged to a living rapist or paedophile instead of a terrorist, and was the only evidence proving their guilt, would you feel the same?

Yes. There are many cases where the only evidence against someone lives inside his own head, and the State has no right to compel someone to give evidence against himself. Likewise, there are cases where someone has encrypted the only evidence against him, and the State has no right to compel him to decrypt that evidence.

How often is any crime perfect, anyway?