Also to be 100% clear, when I say "nudes/semi-nudes of children", I mean images like the one in question, not images with any kind of actual sexual content or overtones.

Well, you've already stated that it doesn't matter; if they want to fap to your kid, they'll just Photoshop their face from a clothed picture onto a pornographic image. Furthermore, I don't care if someone faps to a picture of my kid, me, or a potted rosebush; their fapping doesn't hurt me any, and putting even fully…

Frankly, if some pervert out there has the option to fap to a picture of my kid, or actually rape a child (mine or anyone else's), I would be more than happy if they chose option A.