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Very much so! And it's a very unfortunate too.
A case of a few attention seeking bad apples ruining it for a lot of others.

Yes, some people have no sense of self control: give them an inch and they want a foot, give them a foot and they want a yard. So because some showed no self control the situation in the gallery got out of hand and more and more people started to post such thumbnails in order to generate views. As I said before you can't have a rule that is loosely open to interpretation.  So to prevent "interpretation" and "What about this!?" or "Why not this?", Renderosity clearly stated "absolutely no nudity in the thumbnail."  That is not open to discussion or debate and cannot be misunderstood. No nudity is no nudity...of any kind.  They even stated what body parts are considered "nudity."

Quote - To comment back on the original posters image, as en example, an auto generated thumbnail of it's entired image would show such a tiny amount of nudity, and in such a small part that it certainly doesn't fall in what i would find uncomfortable viewing in a thumbnail form.

Yes, I agree. However, "give an inch, take a yard."  How do you "measure" acceptability? With a pair of calipers? or perhaps blowing it up in a graphic program and counting number of pixels the nude area covers? It's not possible.  If you start to allow some nude images to be resized using the auto thumbnailer, then you have to allow all because you will always have someone crying foul.

"It is good to see ourselves as others see us. Try as we may, we are never
able to know ourselves fully as we are, especially the evil side of us.
This we can do only if we are not angry with our critics but will take in good
heart whatever they might have to say." - Ghandi