The anecdotal evidence is helpful, but it doesn't fully answer the question that GP really wanted answered: Is it Apple's policy to allow nude photos in iCloud?

The anecdotal evidence is helpful, but it doesn't fully answer the question that GP really wanted answered: Is it Apple's policy to allow nude photos in iCloud? Apple is known to start enforcing broad rules in new ways without notice. Unless they've made a positive statement confirming that such photos are allowed (I don't know, seems unlikely), I would assume that it's possible for Apple to turn on a nudity classification ML on everyone's photos tomorrow and ban anyone that matches just like Microsoft. I also think that Apple seems to respect user privacy / rights better than Microsoft (though not so much developers). So you might say it's unlikely, but my point is that it's possible; act accordingly. Is it your personal account and you have a backup and you don't think the risk is worth the hassle? Sure, do whatever you want. But is this Apple account even associated with the developer account of an app that makes your living? I would think twice.