I should note that while I don't know of a "illegal image lives on-chain" solution, a solution to "illegal image is sent to your wallet" is found in Grin's Slat

I should note that while I don't know of a "illegal image lives on-chain" solution, a solution to "illegal image is sent to your wallet" is found in Grin's Slatepacks: transactions have a synchronous component, so the receiver has to accept them.