The US federal definition of child pornography requires that an actual child exist (18 USC 2256, 8). It used to include virtual children until the US Supreme Court struck those provisions down as violations of free speech (Ashcroft v. Free Speech Coalition, 535 U.S. 234 (2002)).
The most ironic thing about this entire story is that Linden Lab now attempts to censor Americans' free speech because of GERMANY, of all places. According to wikipedia, beastiality is legal in Germany. It's also legal in some other countries in Europe, from where Linden Lab would rather generate income.
So to recap, in Germany: Virtual sex with virtual children = ILLEGAL Real sex with real animals = LEGAL
Thank you, Germany, for providing clear moral compass and leadership for us pathetic, immoral, Americans!