At the time reddit was not some unknown back corner of the internet and had already begun working with law enforcement to enforce anti-CSAM laws due to material being treaded in private messages and private subreddits. That it took a media exposure take down the specific subreddit indicated that it was likely on the legal side of the line, through it was going close enough to the line to make others uncomfortable. If the material was actually illegal, wouldn't it have made reddit the largest clear-net site containing CSAM? In such a case, I find it hard to conceive that media exposure and not legal actions is why led to it shutting down, and with no admins being arrested it seems the most reasonable assumption left is that it was on the technically legal side.

This would likely be like the use of underage subjects in nudist art, painted, drawn, or photographed. Such art is generally not considered pornographic and are legally protected, and some even displayed in museums and the like, yet websites will still ban the material to not have any relationship to it and to not have users trying to push the boundary. I'm speaking to the extent that rules are enforced, many websites have issues with enforcing rules in general due to the amount of user generated content being much larger than the amount of moderation available, so there will be something slipping through moderation from time to time.