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"

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.