The sensor does not do the decryption or authentication. The attack vector would be a sensor that has been replaced with a mechanism that replays a snapshot of the phone owner's fingerprint and sends that down the wire to the mainboard. Apple is attempting to curtail that type of attack by authenticating the physical sensor to the mainboard.
So disable the sensor if it's found to be invalid. You don't destroy a $500 phone. What if the sensor goes bad? New phone? Seriously people.