I disagree. They used the word "involved". And that term means sth has a part somewhere in the process. Which applies if you feed it a real picture of a face or even use it as a template. So a real image was "involved", disregarding if it looks or is real. However it gets processed or becomes part of the final thing, it was involved nonetheless.
The issue with that is that it's a very annoying form of bullying. And kids are afraid to tell someone because of the nature of it, they're being blackmailed or whatever and it's difficult to cope. I think I even read that lead to teens trying to commit suicide. Which isn't nice, if true.
But I certainly agree that there is too much hysteria, mixing everything together, spreading FUD, and exploiting child abuse to push for mass surveillance or other political agendas.
Ultimately, I think a phrase with "involved" is a good choice. It makes it clear that it's not okay if a real child is made part of the process. We can argue if it's alright to do fictional drawings which seem to be okay in California and for example in Japan. But (ab)using real people no matter where in the process would definitely cross the line for me.