'Bad' is a difficult quandary.
If we're talking morally, most people's fetishes are probably morally fucking terrible. Such as rape fetishes and things of that nature. People are even sexually attracted to violent rapists, serial killers and murderers. Its called Hybristophilia (there's a name for everything). So yeah, its morally terrible as any paraphilia or fetish.
Now bad as in actual real world harmful? No.
I've written a lot about pedophiles and have avoided this topic, but I guess I'll throw my hat into the ring as someone whose had the unfortunate experience on researching pedophiles and sexual criminality.
Firstly, there is no evidence that this art causes pedophiles to offend. Pedophiles will always offend and will get off on children in ways that you or I could not imagine. There was a Slate article where a pedophile was babysitting (horrifying) a young girl (under 10) and she was doing her ballerina moves. It got him so turned on he had to go to the bathroom and masturbate. I had to know this, now you do too. So pedophiles will fantasize in situations where we would never even imagine it. Also, pedophiles always offend. I don't believe in the existence of so-called virtuous pedophiles. If anything, consuming this basically gives a buffer period where they aren't harming real children or consuming child pornography. But in the end, I believe it is an inevitability. Whether five years or fifty, they will offend. They will have fantasies about every day children they see. This is of no influence one way or the other.
Secondly, loli/shota don't really do it for them as they're highly stylized art forms that don't depict reality. You might think that a highly sexualized loli who understands sex and consent would be a dream for a pedo. Hate to say it, but no. Pedophiles want the mind and body of a child. They're like vampires who consume that innocence. So the 3,500 year old loli dragon vampire succubus doesn't appeal. They want actual children. Sometimes the gender doesn't even matter, as some pedophiles molest indiscriminately. As long as they're pre-pubescent and children. I mean we're talking about monsters on the same level as serial killers who basically destroy children. They trade real children like trading cards. And that is what they crave the most. Simply put, they are not satisfied with fiction. Pedos are not even satisfied with women who look like children in porn. Girls who are 20 but look extremely young do exist. The thing is, they're not children. They're not after a mind any more mature than basically 12 or 14. They may say that or think that, but don't ever believe a word these faggots utter. The only thing you should believe is their death rattle after you put a bullet in their fucking skull.
Thirdly, pedophiles are notoriously manipulative and sociopathic. Which is why they're untreatable. They want everyone who consumes this to believe themselves to be pedophiles. In reality, there's no such thing as drawn child pornography. Child porn is illegal because it: Enriches organized crime. Most child porn these days is either produced or distributed by criminals. Harms actual children. Most children in child porn are either dead or victims of incest and human trafficking. Consuming child porn perpetuates abuse, torture and death. Which is why we have laws against it. A drawing cannot be harmed or do harm. No matter how much you believe it to be true. And pedophiles want you to believe it. Because they want every single person they can get. So pedos who say this made them pedophiles can't be trusted, because you can't trust a singular word any of these motherfuckers say. Pedophiles will do anything to normalize their behavior, any excuse in the book. Which is why studies by them and on them should be read very, very carefully. They'll say its a sexual orientation or that every male is actually a closeted pedophile since we all used to fuck kids when our maximum age was like 27. Anything to justify their pathology. Most studies on pedophiles basically have this disclaimer that pedophiles are manipulative and that their results are questionable. The one thing for sure is they're manipulative sociopaths who want to destroy and hurt children. They will do anything to justify it as not harmful, excepting taking responsibility. That's one thing you can count on a pedophile to never do.