From what I'm reading, you seem to be right - the story goes that the law back when tentacle porn was "invented" was written or interpreted in a way that made depictions of genitals and sex acts illegal, but tentacles are not genitals and sticking a tentacle into various holes isn't sex - so, "not porn". These days, it's interpreted a lot more lightly in that you "just" have to censor everything, which opens the door for actual porn (3D or 2D) with the tradeoff of having to also censor a dick-like tentacle here and there. I think that's a fair tradeoff.