The processing happens on the A7 chip, but separated from the OS. Of course, the question is whether it's possible for Apple or someone else to update the fingerprint software to give back more data than just the yes/no, or if you could reconfigure the hardware so that the OS can talk to the sensor directly.

But again, I'm much more concerned about all the other information my cell phone operator, so this is quite simply just hysteria, and undermines the rightful concern us techies have about surveillance.