I did actually think of that but decided it would be a net good. People would learn to buy from trusted sources (which would probably work in Apple's favour) and also it would out the thieves in a rather unfortunate way for them, so they'd probably get the reputation they deserve rather quickly.

You miss the point. I do not care what "the people" learn. I care that my car window is not smashed if some low-life sees an iPhone inside, cause it is known that it holds no value if stolen.

Yeah I mean I get that. I'm assuming enough people would care to mark their devices stolen so that the same happens.

You are missing step 6, which is for iphone B to stop working after step 5. And part 6 would also include some kind of nasty "your phone has stolen parts in it" message to the user.

Just like the "don't boot with non-registered hardware", this is all software and can be changed. Maybe in future releases of iOS they change how this "check for legit parts" process works.

I don't think they missed it. I think this is exactly the flaw they're pointing out.