One of the more "funny" ways to get around that japanese prohibition against the display of genitals seems to be to cover them in ..er.. semen. Who knows? that may be the reason for all the bukkake... And of course, a lot of japanese hentai and the like is hosted on servers placed somewhere where the depiction of genitals is allowed.

Well the "Uncensored" CG art you see in Pay sites. (Usually these pictures are stolen from simple adult PC sim games) have the genitals re-drawn in (Often poorly) by whoever hosts the pics. In the west anime, manga and games that are brought over can use footage without the mosaic censorship... asuming the censorship wasn't drawn in. (I remember My friends and I getting a good laugh at the "Lightsaber penises" in this one show we were watching at a con.)

Yes, I've heard that the MacArthur administration had a lot to do with the whole censorship thing in Japan. I don't know whether the fascination with bondage/SM, etc. is an outgrowth of that or something more ingrained in the Japanese male psyche. Certainly the art of rope bondage (shibari, etc.) goes much further back than WWII AFAIK. I don't know about the tentacle thing--possibly an outgrowth of the whole monster genre. Many cultures seem to have a somewhat similar thing, Leda and the Swan, Zeus as a bull ravishing whatever chick that was and even the constant alien abduction/probing and 'I had Bigfoot's Baby' stories in the tabs here in the US. Despite the peculiar censorship rules, the Japanese seem to be more open and have more fun with all of this than most places.