Yes, some common sense
I think all sides here need to keep some perspective.
Wikipedia is not hosting CP; if that image is considered CP, then so is the Pulitzer Prize-winning image of Kim Phuc Phan Thi. Secondly, the image is "available" (in a higher resolution) at the Amazon page for the album, and has been for years. Can you see the IWF adding Amazon to the blacklist? it wouldn't have hurt for the IWF to have contacted the WMF if they had concerns.
But Wikipedians who are crying foul over this also need to calm down just a tad. The IWF is not a right wing or conservative organisation; it is paid to respond to perfectly valid complaints, even if the IWF acted in a heavy-handed manner on this occasion.
Wikipedia administrators, no matter how well meaning, are not going to be the ones to solve this problem. Someone from the WMF needs to contact the IWF to thrash out a way forward.