Images and videos are usually stored on the blockchain merely as links to the actual content hosted elsewhere. That means that in the case of child pornography or other illegal content it's the persons or organizations hosting the actual content that would be liable and can be forced to remove it.

It is possible to post the actual image/video content to the Steem blockchain (see steemliberator.com) but that can be done with almost any blockchain, many of which are much easier to use for that purpose than Steem.

I agree with you about many of the issues here - specifically the great power a small number of whales wield over the entire system - but I don't think illegal / inappropriate content will pose much of a problem.