How ironic that it should be banned on the Xbox, where you can encounter every form of violence and gore imaginable.
Would some 3D rendered boobs have been ok if they were zombie boobs?
I don't like that AO does to gaming what NC-17 does to movies; adults should be free to play adult-themed games. But I also don't see it as a great loss to humanity. It sucks a little that Microsoft and Sony are catering to a lazy style of parenting, but you can write those games for an uncensored platform instead.
I let my 11 year old play CoD and Halo - sometimes with a twinge of concern but as all his friends do it would have to be more than a twinge to make me stop him.
I don't think this has impaired his view of violence in the real world - we watched a TV recreation of the events of Bloody Sunday and he was genuinely shocked by the behavior of British soldiers even though his school has an Army Cadet unit and he has friends with big brothers in the forces.
But: why do you have that twinge? And, what does "what all his friends do" really have to do with your own parenting decisions? All my son's friends drink bottomless cups of carbonated sugar syrup, too.