This is actually a topic I've done a decent bit of thinking about, since I followed news postings and discussions about the Christopher Handley case on Anime News Network for quite some time. (For those unfamiliar with that particular case, these are a
few postings that delve into it a bit, though I'm sure there's plenty of more news-ey stories about it scattered around. Interestingly enough, this case wound up having to do more with interstate commerce and obscenity than straight-up CP, as the judge in it ruled part of the PROTECT Act unconstitutional.) It's something that really does call into question the true intent of the laws prohibiting possession and distribution of CP. Like Flipside said, the theoretical intent of such laws is to rightly protect vulnerable members of society from truly horrific and awful abuse. However, the application of said laws often seems to trail into the realm of thought crimes more than anything else...and that's something I can't condone in any circumstances. You can't arrest someone for imagining something, nor can you for putting pen to paper and drawing a cartoonish representation of a human being. That's about as un-free as a society could be. Unfortunately, as in many other instances, the cries of "Think of the children!" wind up drowning out any chance of rational and intelligent debate on this particular topic. Can you even imagine the sort of public outcry a member of Congress would cause for standing up and introducing a bill preventing prosecution over cartoons of naked children? He'd be run out of office on a rail. And forget about trying to fund an unbiased scientific study on whether virtual instances of CP promote consumption of the real product, or instead provide a harmless outlet for people with pedophilic tendencies; as massively useful as such a study would be, no one wants to touch it.
From where I'm sitting, both the production and distribution/possession of actual CP should be blatantly illegal; the former for obvious reasons, and the latter because it at least indirectly promotes the former. However, when you move away from real human beings to lines on a paper, or polygons on a screen...you shouldn't be able to legislate that. If it's not actually harming another human being, the law has no business in it. Like I said, we don't really know whether such media actually serves as a healthy outlet for people who are hard-wired along pedophilic lines. Sexual attraction isn't just a target that one can re-direct via one's own willpower; I doubt most people who are considered pedophiles would ever walk down that path given the choice beforehand. If material like loli/shouta hentai helps people get their rocks off and prevents them from trying to do the same with a real child, then so much the better.