The court order is essentially a search warrant for the phone. So from a legal standpoint, certainly they have the authority to do it. It's no different than a search warrant to search their property or their car or bank account information.

Is someone going to argue that they don't have probable cause?

The thornier question is whether Congress can pass a law that requires devices to have a "back door" to any encryption. From a strictly Constitutional standpoint I don't see why not but it would be interesting to see what would happen if they tried - I don't think it would go well for the government for a number of reasons.