Linning, I agree with you on some of the points you've made. I agree that sex education needs to cover safe sex practices and consent for gay and lesbian relationships as well as heterosexual ones, and that it's important to discuss with children the differences between what they might have seen (and might not have seen, as I think it's probably an incorrect assumption that ALL children have seen these things) in internet porn and real-life sex, and how many of the things they see in porn are unsafe and not reflective of real life.
However, I just can't agree that playing a game where children are describing sex acts in front of peers and teachers is acceptable, and being encouraged to dream up creative ways of combining body parts and objects. Real-life sex isn't a sort of 'what can I stuff where' bonanza, and a lesson like this runs a real risk of harming children in all the ways PPs have described.
I think that developing a sex education curriculum that meets the needs of all pupils at this particular point in time is incredibly challenging. Some children, as you point out, will have already viewed graphic pornography. Some, as a PP described, will only just be starting puberty. Some may have been sexually abused. Addressing the needs of all these pupils in one classroom requires a great amount of sensitivity and I think any curriculum should be designed by people who have specific expertise and experience. I don't think it's good enough to say 'ah well, they've seen worse.' They might not have done, and if they have, we need to be the counterfoil to that by basing sex education around safety, boundaries, and consent. This activity does none of those things.
You can have an inclusive sex education curriculum that addresses these important issues, but this is not how it should be done.