Chattanoogan,
This is not an issue of hype, these are genuine crime victims, this is a real vulnerability, and I want some protection against it. Simply allowing users to choose would solve the entire thing. There is no reason every device you log into needs to be trusted.
To be clear, these users did not have their phones unlocked. These were two man cons where one stood behind the victim and watched the passcode get entered. The other grabbed the phone. So, they have the passcode.
Apple told these people that the phone is the account, not them. They lost their accounts, Apple refused to restore their access. You mentioned banks and credit cards. Banks don't say whoever has my card owns my accounts, if someone grabs my wallet, I can lock and cancel the cards immediately.
Additionally, there's no reason to discuss physical coercion, this is not at all about that.
I tried marking one of my phones as lost, and I was not asked for my passcode. Of course, again, we are talking about what happens if the thief has the passcode.
Any phone should be able to lock everyone out of all devices and need to reenter the *password* to get back in.
I don't use email on my phone, and I can remove my phone number from the cell remotely if I choose, so traditional 2FA would work fine for me if I were allowed to eliminate the "trusted devices".