What about PGP? and cryptography in general? you can't do an algorithm that don't encrypt CP..
There is no way to stop a particular kind of content, and yes: technology could be used for bad things! you should already know this.
Even if every package were monitored&filtered and encrypted messages were illegal steganography could be used to circumvent the censure. So, it's impossible to stop the distribution of CP, we must accept this.
The real problem here is child abuse, and people should focus on this. Sometimes I think that actually our society don't really care about the children: it's more like they just don't wanna know and that's why the common answer from the govt is "filter the Internet".
IMO the best we can do is think how we can find the child being molested on certain pic, not trying to figure out some magical way to stop distribution, because if we keep trying this we're just wasting the(ir) time...