Users viewing illegal content is one thing but instance owners hosting it is also an issue.
I might be wrong about how content mirroring on Lemmy works but I’d imagine instance owners would clearly be liable for “publishing” any illegal content hosted on their instance.
There’s not really a way out of this using tags. And the moderation log probably needs to be purged from the actually offending content as well. And in the specific case of CP (which can include loli depending on the jurisdiction) having the content in a database might also be illegal.
So that’s a whole headache…
Sony Music is currently coming after DNS provider Quad9 for resolving a piracy related domain, and they’ve succeeded in two courts so far. At this point I don’t think any copyright lawsuit is too stupid to happen.