The hardware key is designed to be impossible to extract from the device. That's part of the security, so you can't simply transfer the data to a phone where protections against brute-forcing the user key have been removed.
To spell it out (1) request new encryption key from device (let's call it key4cloud); (2) encryption key generated, displayed for physical logging by the user, & stored in the secure enclave; (3) all normal backups to iCloud are now encrypted via key4cloud; (4) user loses phone; (5) user purchases new phone; (6) new phone downloads data; (7) user enters key4cloud from physical notes & decrypts backup
Yes, it requires paper and a pencil and user education (hence the opt-in). But it's also incredibly resistant to "Give us all iCloud data on User Y."
