If the local amateur porn producers know that 1 Hour Photo won't print their pictures, then 1 Hour Photo's employees are going to be stuck looking at far less amateur porn.

Sure, but the rule not to print naked adults might be useful and necessary to enforce a rule of "don't bring your amateur porn to this shop, please". Which I think is a reasonable request. Some might not be bothered, but the analogy to sending dick-pics comes to mind.