Hi!
Well, you may call me a fanatic, but I think that real life children should never be subject to (pseudo-) sexual activities induced or encourage by adults.
For a longer explanation, while there are individual differences in development, you can reasonably assume that a good portion of children do not understand all the implications and consequences of sexual activities. And sexual activities, unlike other hobbies like stamp collecting, do tend to have a major impact on the persons involved - in a positive or negative way, depending on the situation. Therefore, sexuality requires a responsible decision which you can not expect from children (individual children might be far enough to make such decisions, but you can't assume that all are able to).
Thus, you are exposing someone to a potentially harmful influence that they are likely not understand completely and thus can not make a responsible decision to avoid or to engage in. And I do have a problem with putting people into danger (danger meaning that something can have negative consequences for them) just for your entertainment.
And believe me, there are organizations of would-be child molesters who are lobbying to removing the age of consent and otherwise allow them to engage in sexual activity (in Germany, you can look for the "Krumme 13" (tl. "Crooked 13")). They claim to be defending the right of children of self-determination, they point to natural tendencies and all those things. So, there are those who will readily use such arguments in order to obtain their (in my opinion intolerable) goals.
Deathworks
P.S.: And given that such an event is already not completely harmless (I don't think people would be surprised if people masturbated to the pictures from regular beauty pageants and the like), I think it does differ from other things as it is already with one foot in shady territory.