Snow, Reading and Videotapes (DVD's, actually)

It's snowing again. Beautifully falling, decorating the trees like a postcard from somewhere far away. My princess calls it 'illustrated': "look at that illustrated stop sign, mommy, look at that illustrated tree!".
She's reading now, spelling the world around her. A simple car ride becomes a spelling bee contest: "what does N-A-I-L-S mean? what does V-E-R-I-Z-O-N spell? Don't look mommy, let me ask you!" Prince Reader and I can't look and are not aloud to say the word before she's done spelling. It's a whole new world out there, and we are about to spell our way through it!

Talking about reading, we watched Freedom Writers together and my son got the book out of the library. The book consist of the actual diaries of the kids the story/movie is based on.
Prince Reader reads fast. 30 pages into the book he asked himself, and us, whether it's appropriate for him. We read a random page, swallowed hard and answered that question to ourselves: no!
Both of us oppose books censorship so we agreed to discuss it with him, main message to be: 'It's not appropriate for you at this age, but if you want to read it you may. The diaries were written in a certain context, by kids with a very different life reality than yours. We'd like to keep discussing any issues that might bother you with this book. Let us know how it progresses'.

Hubby took the book and was racing through it to see what's up next. Seeing that some interesting issues rose by page 45, he discussed it with our charming reader, who, by that time, put the book aside. Of course the discussion got him reading again, and of course he read it faster than both of us so this morning he showed hubby the following sentence on page 150:
"As his pe***s twirled in my mouth, thoughts of the popcorn he promised me ran through my mind"

Yikes.

Now what do we do? How do you explain to your innocent child that such disgusting abusers exist? How do you keep sex and love connected in a good loving way, when reading about these kinds of relationships? and why now? Why does it have to be out there at such young age?
Yes, I know, you might ask: why did you let him read it in the first place?
I have two answers for you:

1. We are a family of readers, this is our world's reality.
2. We have to keep communication open, discuss our way of seeing the world, relationships, love and sex. We can't prevent our kids from reading so to never discuss the subject.

I chickened out. Put it on hubby's bill of education - you raised it, now you explain it.

What would you do? And who would you do it with? (just kidding, couldn't resist)