OK, so there might be more to the FBI's bust than just the stories. But for those who agree that the FBI should shut down anyone who peddles underage sex stories, then you would agree that the FBI should shut down Amazon and 99% of the bookstores in the US?
They all peddle underage sex literature:
http://www.amazon.com/gp/product/0679723161/
http://www.amazon.com/exec/obidos/tg.../-/B00001IVFG/
(do not click these links if you are afraid the FBI will bust you for searching for underage sex stories)
As for 'literary merit', most writers and artists are not considered literary or artistic until after they've been dead for some time and then people want to feel nostalgic.