Isn’t that basically what softcore porn is? It’s sick and should have been shut down.

It didn't host child porn, but when it was shut down part of the statements Reddit gave was that they had found users of the sub were using the comments sections of /jailbait to meet like-minded people, and then were using Reddit DMs to arrange exchanges off-platform - that likely did involve CP.

It was well-known and indisputable that child porn was posted to that community not infrequently, but was being removed by mods when detected. That's why Admin liked ViolentAcrez - he ran the community specifically to prevent it from being worse. The other allegation from that era was that the community routinely featured submissions of scantily-clothed minors who had also appeared in nude image sets, as unremoved content, and the comments sections would reflect that.

I think it's completely reasonable to frame that community as "dedicated to actual CP" for all that they weren't hosting it directly. The same way that /r/Piracy is dedicated to pirating digital content, but doesn't host links to piracy because that would be against TOS. The only reason Jailbait didn't host CP directly was the fact that as you note, the FBI would have shut that shit down in a heartbeat - if not for the illegality, that's absolutely what their main content would have been.

So much of what that community was up to had been openly known and discussed by the wider reddit community for years prior to the media attention that eventually pushed Reddit to shut them down.

If I recall correctly, one of the things that led to it finally being shut down was that having community of people interested in that content inevitably led to them sharing the real thing via dms

The content may well have been illegal in some jurisdictions.