The encryption on the hash DB has very little to do with recreating images. It is pretty trivial to make sure that it is mathematical impossible to do (just not enough bytes, and hash collisions means there is an infinitive large number of false positives).
My own guess is that the encryption is there so that people won't have access to an up-to-date database to test against. People who want to intentionally create false positive could abuse it, and sites that distribute images could alter images to automatic bypass the check. There is also always the "risk" that some security research may look at the database and find false positives from the original source and make bad press, as they have done with block lists (who can forget the bonsai tree website that got classified as child porn).
My own guess is that the encryption is there so that people won't have access to an up-to-date database to test against. People who want to intentionally create false positive could abuse it, and sites that distribute images could alter images to automatic bypass the check. There is also always the "risk" that some security research may look at the database and find false positives from the original source and make bad press, as they have done with block lists (who can forget the bonsai tree website that got classified as child porn).