Sort of. It started that way, but the regulations go a lot farther. The list of restrictions, as far as anyone outside the industry knows, is this: http://zepy.momotato.com/2009/06/23/
This isn't directly relevant to Danbooru, so I'll just say that if you want more information, you should browse that site. The owner's done a good job following events.
Yeah she does. One bad habit ZUN has is that he consistently keeps changing his mind about what his characters - more or less - look like. In Sakuya's case, she went from being a pentaneko to what would be avrige-sized by Gensokyo's standard. Unfortuntly some random lolicon/Sakuya-hating Noob/Troll in denile and/or trying to look smart spread a false rumor saying that she "pads them" and most fans have belived it.
What do they mean, "Girls may be injured inside of games"! These people can't tell the difference between fiction and reality!That's too bad for you, Patchouli, but we're not really interested in ero-game regulation after all.What, though it may look like somebody else's problem now, you too read stuff like Jump, right?When the regulating escalates, the To Love-Ru that everyone loves so much may disappear too!So— Sofurin to completely ban the manufacture and sale of assault ero-games …?It's horrible … The assault goods that I love more than reading may become unavailable!'sright … It doesn't affect us pure love people.That won't happen.
