Note the language used in describing the prostitution they're talking about, terms like "exploitative or coercive relationships", "without the power to enter freely and willingly", this is the context that describes their mention of prostitution on that list of evil sexual behaviors, it is evil IN THAT CONTEXT, for the reasons they listed, much as the book of exalted deeds explains why poison is against the paladin's code, and then explains the exceptions and offers ravages as an alternative. It's not going to go into that kind of detail on prostitution because it's the book of exalted deeds, not the book of erotic fantasy, but similarly, it can be logically inferred that if you strip away the evil context, by presenting an example of prostitution that is not exploitative or coercive, being entered into by willing participants (which you can do in a fantasy setting, and which represents the example Cedric was involved in), then the prohibition would no longer apply, elsewise why give context explaining why it's wrong, if it's wrong as an absolute irrespective of context?
It's not going into a definition under the terms of which prostitution is wrong, it's saying a good character won't have sex under the following conditions. Prostitution is listed as a definitive situation that the character won't be involved in. The sentence can be rephrased as follows:
A good character is not opposed to sex in principle, but will not condone exploitative or coercive relationships such as prostitution. A good character will not condone the use of slaves for sex. A good character will not condone sexual contact with children. A good character will not condone sexual contact with those that do not have the power to enter freely and willingly into a relationship of mutual respect.
The book says a good character won't condone exploitative or coerced relationships, and gives prostitution as an example of what an exploitative or coerced relationship is. The book defines all prostitution as an "exploitative or coercive relationship". It doesn't say 'A good character will not condone prostitution that is exploitative or coerced.'
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