So am I right to infer that the retail version does not contain this modification, that the user has to go online, seek it, download and install it?
I doubt anything comes of this beyond the publicity it generates for PIAPS, and the record she will cite during her upcoming campaigns as evidence of her concern for "the village." Of course these campaigns will be funded by the people who promote this garbage.
This woman's cynicism is beyond belief.
That depends on who you believe. The mods author claims that the code and XXX content were already in the game, but were simply disabled and inaccessible. He says his mod does nothing other than activate the already present content.
Rockstar claims that the author is lying, and that the whole mod is a user-created customization.
If Rockstar is right, then they did nothing wrong and Clinton will look (even more) like an idiot. If the author is telling the truth, however, then Rockstar may actually be in some legal trouble. ESRB ratings are now encoded in the laws of several states, including laws governing the sales of mature content to minors, and if Rockstar failed to have their game properly rated for explicit sexual content they could get nailed under several different federal and state laws.
If the author is telling the truth (which looks likely, because this would be trivial for Rockstar to debunk if he weren't), then it appears that the code may have been for a minigame or cutscene that Rockstar decided to cut from the final product. Unlike movies where a cut scene is gone for good, disabled software features can still be accessed if the source code isn't deliberately removed. All it took was a hacker clever enough to figure out how the code worked and recreate the pieces that Rockstar removed while disabling it.