I'll play the devils advocate a little, but bare with me I haven't read the whole thread.
I'm 32 years old, I have always loved playing videogames and being online (I found it easier than being with people in real life as I could control communications easier).
From when I was 14 I was often going out meeting people I met online, friends or otherwise. Once, an older man was standing on the bus stop which freaked me out and I just stayed on the bus and never got off. This didn't put me off meeting other people, I was always conscious about doing so in public.
At 21 I went to a different country to meet a boyfriend of 6 months, to stay with him at an address i didn't know geographically (he tell me the address but I knew nothing of where it was etc). I have never met him in real life bit i have spoken to him over skype/games/discord extensively. I have seen his face and met his friends (online) and felt very safe visiting.
Another 5 months later I moved with him in said country and we had a very happy relationship for 3 years. About 90% of my closest friends I met online, I suppose I'm that kind of a person.
I would not diss the idea she is legitimately in a relationship with a real boy she probably seen a million of times via facetime etc. Afterall it isnt uncommont.
However!
The different story is what she or they want you to do to facilitate this.
Two go on a holiday together and meet with the boy together in a public place so that you know who he is? It's not a bad idea if you keen to visiting Holland and doing family friendly activities. If she's not interested in a joint holiday with a potential of meeting him, it's unreasonable of her to ask.
Given daughters age I would not leave them to hang out unless I liked him after meeting him multiple times, I knew where he lived, met his parents and noted his personal details just in case.
I would not be booking a hotel for them, they can work and sponsor their own trips after I lecture her on intenet and personal safety. As a parent I would only agree on a family holiday allowing her to introduce the boy to you - your money, your rules.
Better yet, he can come and stay with you if you are comfortable with it. Or stay in your town and they can meet. Obviously he is paying.
To answer your question about sex between a 16 a 17 year old, as long as its consensual - it is not illegal. Legal age of consent is 16. A 16 year old can rent their own appartmet, work a job and even marry (in Scotland and NI).
That's just my perspective as a self professed online hermit.