Is loli illegal or legal? Debating

One of the most famous story on the net. Which bring a very serious question, is loli illegal or not?

Anime site, hosted in US using vBulletin. Has a gallery involving 'loli' - some sort of sick 'anime' involving children. *note: there was no real child porn, simply, cartoons of it... (sick yes, illegal debating).*

PirateReports, vBulletin licensing enforcer, goes to forum and doesn't like what he sees on the gallery. As the gallery is a part of the site and being discussed on the forums, demands the content is removed / user moves to a different forum software

Argument ensues, user points out nothing is illegal about it (specifically excluded and allowed under a US law although there seems to be another possibly contradicting that), and vBulletin then revoke license due to "moral reasons" - PirateReports did not act alone, they seem to have had the blessing from the vB business manager ("decision not mine" from emails)

http://www.hongfire.com/ <- website in question
This issue ended when vbulletin re-activate hongfire's vbulletin license because it was based on moral reasons and it wasn't part of VBULLETIN'S TOS to have the right to disable someone's license based on what content they share on their site.

Hongfire still hosts lolicon in their gallery, it is hidden from guests but once you register you can view these type of content. http://hongfire.com/cg/?

Question is is lolican against the law? I personally see it an act of encouraging child porn in a cartoonish way. Whether it is real or just some animation, they still use underage drawings in an abusive way. It encourages pedoliphian acts

http://www.hongfire.com/forum/showthread.php?t=79132 Loli Content
Loli images [What is so fun in these type of content]

I was looking around and I have found that loli is indeed illegal, it doesn't matter if you live in a country that belives loli is legal. As long as your sit is hosted on a USA server, then you bound to these rules I beleive and that loli is illegal. A site like hongfire.com gets visitors from all over the world, from Europe, America, Africa, thus hongfire and sites like them are allowing these type of contents to spread around the world. They are exposing the eyes of many teenagers not to mention if there are underages on these sites, which i am sure there is.

Loli is illegal:
http://www.icv2.com/articles/news/13486.html