Yes, it's correct. Giving it more thought, I agree that the scenario of original article should be prosecuted, barring issues of entrapment, unless the perpetrator understood that it's a fake (and he didn't).

That still leaves a point about such "avatars" being legal if made/bough/sold for recreational purposes if everyone knows that noone is getting harmed. i.e., treating childporn as evil not in itself, but because it's evidence and financing for actual evil acts.