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Found this through Googling as well. I'm surprised it's actually set up like this. My dinky bits badge is selectable through chat user options, but my high ranking gift sub badge vanished. Pretty scummy.
The recent policy changes (then rollback) were so close to being a really welcome change.
Patch notes for the change should've made a more clear note that avatars in place of the person still need to follow the attire rules (even if that rule didn't change, it should've been noted again).
Patch notes should've included some examples, it needs some line in the sand for people to know what's okay. I saw a lot of talks on if an erection was too sexual, which may vary on context, but is that any better or different than a large flaccid one? Probably not. I feel like the "show but don't use" mentality worked okay, pairing along with no fluids.
There is also the problem from raids and ban spam to bring down any creator abiding by the new TOS, this put a damper and compounded the chaos. They even got a streamer drawing the Statue of David, which is one of the prime examples of artistic nudity. There were plenty of other streamers that I felt were well within the new TOS, obviously there were those that did not.
There's also just the massive influx of activity from the change, which may not last much past a week as the next internet topic comes around. Doing a full backpedal may not have been the best thing to do, instead refine the policy in these introductory days. This didn't help from other streamers reacting in an over the top way to new TOS friendly content, the reaction makes the TOS friendly art no longer seem TOS. This would likely fade rapidly with time.
Site concerns was a pretty massive failure, and probably an issue with payment providers too. The streams with content labels were not visibly different than anything else. Censoring the thumbnail (with a setting to always show), and likely some other filter/flag to show this content from not only the homepage, but searches and category listings.
If I was on the board making decisions for this here's what I would bring up for allowing these policies:
Manual moderation of art category for a couple days. I saw streams with Twitch staff talking then a hate raid appeared and the channel got autobanned.
Patch notes notating all relevant rules (stating attire rule still applies for virtual streamers / vtubers). With some examples.
For things non-TOS friendly, need to actually say what about the art was not TOS friendly in the ban, it was just confusion from artists doing their best to abide by the TOS.
Actually commit for a period of time with smaller adjustments to policies to catch things you didn't think about, keep daily blog posts in this intro phase with more examples as needed.
In the rollback post, the AI nudity thing is such a cop out excuse. Blocking AI nudity is likely reasonable enough, since it's not an artist going through the motions of creating art.
This has potential to be a really nice change for artists that happen to do nude art that don't want to be on other, less active platforms.
I felt this update was 80% of the way there, but released anyways. That last 20% backfired so badly. I hope you reconsider in time.