It would also be more politically risky.
No doubt they could try - it's technically possible - but I think they wouldn't.
I agree that the fact that this law could be abused in such a way is a compelling objection to it.
There was a candidate in the recent South Australian election who ran on an anti-abortion platform who's website was later refused classification. See http://lifenetwork.org.au/_bpost_2642/Australian_Government_...
Sites such as redtube etc. were blocked until about a month ago. They've all been unblocked for some reason.
Was this on your connection? AFAIK none of this is blocked and no one was actively filtering. What ISP are you with?
Here is an interesting link regarding the black hole of material which is refused classification.
http://www.onlineopinion.com.au/view.asp?article=10128
A pertinent quote being: With Refused Classification, Australia has a category that is not illegal, but the government would prefer that we thought it was.