Just to let everyone know, virtual child porn is not legal, and a man in Utah has been prosecuted for owning virtual child porn (and nothing else).
Not quite. In 2002, the Supreme Court ruled in Ashcroft v Free Speech Coalition that the Child Pornography Prevention Act of 1996 was unconstitutional, including the ban on virtual child porn. However, now we come to the distinction between pornography and obscene material. Not all porn is legally obscene, and the definition of obscenity is still largely left up to the states. Virtual images of children engaged in sexual acts (where no harm to children is actually done) is not necessarily obscene under the law, though it might be. Utah happens to have very strict laws on obscenity, stemming from strict community standards. So, for the case you are referencing, and it would have been nice if you had an actual cite, the material in question was most likely ruled obscene and is illegal because of that, not strictly because it's virtual child porn.
One more time...virtual child porn is legal as long as it doesn't meet the community standards for obscene material.
Nope.
In response to that case, Congress passed a new law.
Sec. 1466A. Obscene visual representations of the sexual abuse of children
(a) IN GENERAL- Any person who, in a circumstance described in subsection (d), knowingly produces, distributes, receives, or possesses with intent to distribute, a visual depiction of any kind, including a drawing, cartoon, sculpture, or painting, that
(1)(A) depicts a minor engaging in sexually explicit conduct; and
(B) is obscene; or
(2)(A) depicts an image that is, or appears to be, of a minor engaging in graphic bestiality, sadistic or masochistic abuse, or sexual intercourse, including genital-genital, oral-genital, anal-genital, or oral-anal, whether between persons of the same or opposite sex; and
(B) lacks serious literary, artistic, political, or scientific value;
or attempts or conspires to do so, shall be subject to the penalties provided in section 2252A(b)(1), including the penalties provided for cases involving a prior conviction.