Isn’t it a good thing for pedophiles to have an outlet for their desires that doesn’t involve harming children? Am I not seeing an obvious downside?

It’s a fair question. But the answer is concretely “no.” It’s indulging, even encouraging, the behavior/illness. And what happens when they start making requests of real underage people? They didn’t actually take the images. It’s still fake. But if it looks like a person in real life, what difference does the distinction make?

This literally happened in Spain recently btw.

It’s still fake. But if it looks like a person in real life, what difference does the distinction make?

I'm pretty sure there is a quite a difference between an actual human being abused and a victimless depiction of such act. Not unlike watching a violent movie. Such people obviously still need help and treatment, but to me it seems vastly better than the alternative.

But it isn’t an either/or situation so it’s moot.

It very much might be an either/or situation for many, even if it's not in all the cases.