Sepulchrave, in response to your arguments, first that Cedric's situation is implausible...not necessarily. Shilsen uses a later piece of fiction to explain it, basically Cedric and Catherine, a former prostitute who got out, set up this brothel as a kind of halfway house to transition girls out of the life, helping them build up some savings and recover from whatever forced them to become streetwalkers or whatever before Cedric and Catherine rescued them. But even without it being spelled out for me why this is the, as someone put it earlier in the thread "stardust and gumdrops" variety of prostitution, I don't have a hard time believing in the idea that women exist who 1, like casual sex, 2, are pretty or otherwise "high class" enough that they can pick and choose their clients a bit and avoid the really distasteful ones, and 3, as a result of 1 and 2 see prostitution as a relatively easy way to make a sizable amount of money and a superior choice to the mundane menial labor jobs that would likely be the only other choices for a woman of their social class in a medieval society. Even in today's society, there are plenty of women who make such choices, just go to Nevada, or see any number of books and documentaries of the "confessions of a former high end call girl" variety, especially the blog by Brooke Magnanti that got turned into the series "secret diary of a call girl".
I also don't see the idea being "implausible" as inherently bad, D&D, and high fantasy in general frequently present a sanitized version of medieval society, which, given human history and experience, is highly implausible, and fiction in general frequently depicts the implausible as a form of escapism. That's why a solar-powered alien who can lift a planet, run at the speed of light, and shoot laser beams out of his eyeballs, but nevertheless looks exactly like an incredibly hunky human and is romantically pursued by several of the world's most beautiful women, is one of our most enduring cultural icons. Also, his best buddy the multi-billionaire who dresses up as a bat and gets EVEN MORE tail. There's a show I watch called Supernatural, which tends to go out of its way to constantly remind us, largely for the benefit of the significant female audience, how hunky and studly the two main protagonists are, in one scene, Sam, one of our heroes, is depicted as having slept with a call girl, an incredibly gorgeous one at that, and having rocked her world so much she's not only willing to leave without making him pay her, but after he insists, she gives him her card so he can call her on her night off for a freebie. I actually found the scene:
[ame]http://www.youtube.com/watch?v=QSxDj06ZY40[/ame]
Is that somewhat unlikely? I dunno, what are the statistics on guys that ripped retaining call girls? But there was no outcry or controversy decrying how implausible this was. your argument, that just because something might be implausible in real life means it shouldn't ever happen in fiction, reminds me of some complaints about the most recent Bond movie, some people have argued that Bond actually rapes one of the women he sleeps with in Skyfall, even though the scene is framed as clearly and obviously consensual, the argument basically comes down to "in real life I can't imagine a woman would consent in that situation, therefore she couldn't have and it must be rape", an obviously silly argument that ignores one of the central conceits of James Bond as a character, which is that women ALWAYS want to sleep with him.
To your second point about Cedric violating archetype....well yeah, that's the whole point, but archetype =/= rules, otherwise you'll have a game where players do nothing but create the same stereotypes over and over again, you might as well play with pre-packaged characters like Lidda, Jozen, and Tordek instead of allowing the players to make up their own. In fact, if you look at the SRD explanation of alignment, they specifically caution against using it as a role playing straightjacket that restricts characters.
Now, Pemerton, it depends. I got in a big debate with JamesonCourage, I think you joined in too, about whether a paladin is allowed to kick someone in the groin. Essentially, since Cedric has a level of rogue in his build, that was a literary application of his sneak attack class skill. If you say the code restricts a paladin from using sneak attack, then you've rendered Cedric mechanically inferior by blocking off a class ability, and that DOES act as a mechanical restriction, if not due to alignment, due to the specifics of the paladin's code. and I believe that allowing a paladin to smite anyone definitely is a significant power boost, and clearly so does WOTC or they wouldn't have made so many prestige classes, like Grey Guard and Shadowbane Inquisitor, with "you get to smite anybody" as one of the main mechanical advantages.
As for religious vows being unenforceable, I'd say in D&D that's definitely not true, we're talking about a world where the Gods are very real and provable, where if you sin, and oathbreaking is generally a very great sin, especially a religious oath, you can be at risk of eternal torment in the nine hells or the abyss, which will be far worse than any punishment another mortal could inflict on you, where celestials descend from the upper planes to punish sinners, and where breaking a deal or vow can get a Kolyarut, basically a magic version of The Terminator, sent after you.
As for whether the writers take for granted that sex has some form of special moral character, considering the mention of prostitution comes as part of a passage explaining that sex in D&D is considered a normal, healthy, and natural thing, I would disagree, I would in fact say that they're specifically saying that from a rules perspective it DOESN'T have a special moral character. I think that what they take for granted is that prostitution is coercive. But "take for granted" =/= "enforce in all situations". They say that prostitution is bad because it falls under "coercive and exploitative", but logically if you invent a situation in which it DOESN'T fall under that category, then their reasoning for why it's evil no longer applies, and the book does not intend to enforce said reasoning anyway. Can we at least agree that that's sound logic and the writers did not intentionally mean that passage to bar DMs and players from ever inventing any form of prostitution that differs from their assumption about the moral character of prostitution and thus no longer falls under their logic?