It's not that simple - look at all the responses in this thread. You've got plenty people here claiming that all of the content in all of those sub-reddits was clearly illegal, some people arguing that it was half and half, some arguing that it's all legit.

I don't even know what was in the sub-reddits, but I can tell you for sure that if there's this much disagreement over whether most of it is legal or not, that's a nasty legal minefield that I certainly would not want to make decisions about, especially given that I'd be risking both my company and my own freedom if I happened to make a mistake and let something prosecutable through. Not to mention that I'm sure there was a lot of work involved in deciding these things on a case-by-case basis.

Personally, I'd be much more comfortable with the situation if Reddit had decided early on to place a blanket ban on these types of sub-reddits under this justification, rather than waiting until the PR shitstorm started up, but even if it is just a face-saving move at this point, I think the logic is pretty sound. I think other user-submitted content sites would probably be wise to adopt this sort of policy, even if Reddit screwed up and was too lenient at the start.