Still a fail...
You can comment on this specific case, but frankly the news reports have not been specific enough to actually know which newsgroups they were hosting, so specific conclusions will be flawed at best. That's why I chose not to comment specifically - insufficient public information. If you work for the plod and you have a list, then by all means share it...
And NO, the automated solutions cannot adequately distinguish between a flat chested 18 year old and a 16 year old - hell, it's darned hard for humans. That is why Australia proposed a ban on flat-chested women in general in porn, which was widely derided. Add in the difficulty in actually recognizing things like cartoon porn from Japan, or porn where the face is hidden...etc. It just doesn't work.
Then we get into the volume issue. According to my newsreader, there are 111,000+ newsgroups currently available. Each of these can have hundreds of posts (sometimes more) per day. Now, I know that merely uploading and processing a file on a public picture share service (Flickr or SmugMug) takes several minutes while it processes, per picture. And that is on a server farm dedicated to it. To do automatic recognition would probably take longer (and still likely fail). And then their is the requirement to actually decode video and then look at sampled frames, right? So...let's look at the volumes involved, and it is quite apparent that it would take a HUGE cluster to even hope to match the volume of usenet binary posts. We are talking a several million dollar system, for a business that only made, what, £2MM in seven years?
If you know of such a system that could work, then please post a link, or at least respond with the name.
Kiddie porn is terrible, and the people that do it, purchase it, and distribute it knowingly should be prosecuted to the full extent of the law. But saying that we want to totally censor all online media because an incredibly small fraction of it might be put to use in illegal ways is like saying we should force all drivers to take blood alcohol tests EVERY time they get behind the wheel, because an appreciable portion of them (larger than paedos on the internet!) have driven drunk.
There used to be such a thing as civil rights in the Western countries. Now, the cries of "terrorist!" and "think of the children!" have decimated them... IMHO.