Should Fakes be allowed?
Like alex_(artist)'s stuff? It's a compilation of body parts, REAL peoples heads and advanced Photoshop so it's kinda bordering on the content of some .onion sites. Is that really what this sight is for?
That subject has been discussed a number of times. Alex claims that his work is not done that way but is in fact CG...and he defends this rather bluntly and rudely (yes, he is actually a member here). As to the rest of your question, any time we see an image that is clearly and provably a mere photoshop or rotoscope of a photograph, that image is removed from the site.
Is there a wiki page onthis? This should go in faq.
Common sense applies. Child pornography should not need to be separately mentioned in the rules. Some content enters the twilight zone but in the end, it's all legal. Different countries' laws prohibit even lolicon/equivalent art though.