Apologies, I should have been a little more specific. I'm not saying VNs should completely move away from adult content, and there are certainly genres and individual works that benefit from such content. Rather, I'm just advocating that more VNs that focus on stories where adult content isn't necessary would be an overall positive thing. Similar to how outright censorship stifles creativity in the way you detailed, the still prevalent expectation of sexual content in many commercial VNs reinforce the opposite problem. Where romantic and sexual scenes get forced in for the marketing of an 18+ tag promising sexual content, but where it clashes with the overall focus of the story. For example, Steins;Gate, Umineko, Higurashi, etc would be objectively worse works if they had forced sexual content. There is no serious need for it in those stories. Likewise, to go with an example I used in my video, Sayooshi would be an objectively worse work without the sexual content.
So I'm not fundamentally anti-sexual content. But I think if VNs lost the reputation of "VN = porn game", it would be overall beneficial for the medium and could attract more people (both creatives looking to work with VNs, as well as a broader audience for VNs) if that reputation for adult content weakened.