Your Apple engineers smuggling code example seems a little out of left field.
I haven't been following this super closely but as the recall the FBI is essentially asking Apple to provided them with a backdoored OS that lets them get around the passcode attempt limits. Apple is concerned that this both sets a precedent while also providing the FBI with a way to get around any passcode on any iOS device they possess. Cook has stated repeatedly that there is no way to guarantee that a backdoored OS would only be used for this one instance.
You say you're in favor of the FBIs request as long as the firmware isn't handed to them - but isn't that exactly what they're asking?
Alledgedly, the FBI already has the information (via iCloud backup), or at least had access to the information before an FBI made error.
In any case, Apple has already been known to comply requests to hand over data on an iPhone. If it were simply the case they needed the information, Apple may have done the whole thing behind closed doors.
The FBI decided to bring this case out into the open, and given the reports about even more phones that need to be cracked open, you have to consider that this may have been a move made to force Apple's hand.
I haven't been following this super closely but as the recall the FBI is essentially asking Apple to provided them with a backdoored OS that lets them get around the passcode attempt limits. Apple is concerned that this both sets a precedent while also providing the FBI with a way to get around any passcode on any iOS device they possess. Cook has stated repeatedly that there is no way to guarantee that a backdoored OS would only be used for this one instance.
You say you're in favor of the FBIs request as long as the firmware isn't handed to them - but isn't that exactly what they're asking?