Still seems like you're missing the point.

You think, censorware's bad. You think this is meant to be a way around that, a minimal censorware. The problem is, that won't satisfy the market's needs (librarians' needs). So you object that there's no demand.

This is a misunderstanding. The point is not that censorware is bad. Censorware is good. It provides a library environment which the customers desire.

The problem is that closed-source censorware is bad. It is secretive; it blocks political sites rather than indecent ones. It protects the biases of the creators of the software and keeps them from being exposed.

Felten's proposal doesn't stop censorware or try to show that it is bad. It instead tries to create good censorware, censorware that will better satisfy people's needs. It will not have secrets, it will be open.

It will still block the indecent sites. It will satisfy all the needs of the librarian. It will help to prove that censorware is good and can be better.

If there was a market, why was a government law
necessary?

In fact, my challenge is: SHOW ME THE MARKET!

With the exception of the reference above, all I see is
many people saying "There should be a market, I say so, it'll happen".

You raise an interesting point about child pornography. Given that, as you say, mere possession is a crime, who takes the responsibility for evaluating that portion of the closed source database? It's illegal for them also.