My sister and i have to confront our children that draw porn online

For those who want a quick summary, see the second to last paragraph. I posted this on Reddit and did not have as much luck as I would have hoped for so I'm trying different sites. I have a 14 year old that I will call Kevin. My sister has a 13 year old that I will call James. The two are very good friends and go to the same middle school. They are not very sociable and only have 2 or 3 other friends that I see them regularly interact with. They are very sweet kids and very polite, and work hard at school. Me and my sister assumed that we would have an easy time educating them about sex and making sure they we mature about it. But earlier last month, we can't figure out what to do.
Kevin and and James are very artistic kids and we like to reward them with computers and games as they have never shown any lack of respect, or any less attention to their school work. Because me and my sister work at different times of the day, we usually have them at my house during the day on weekdays and she takes care of them for most the weekend. Last month I was cleaning Kevin's room while he was at my sister's house and found one of my bras and underwear under his blanket. I looked around and found another one of my bras and underwear in the room so both Kevin and James must have been using there own set. I called my sister who was at work and we both started laughing about it. Neither of us were mad, we have joked before about it before and felt ready to talk to them about it. We decided we wait until Monday so they could enjoy their weekend together.
On Sunday, my sister called me and asked if she could come over with the kids because she needed to talk to me. We sent Kevin and James out so we could talk in private. My sister seemed odd and asked me to bring her a computer. She said she was looking through James room to see if they had any of her underwear and found a binder and notebooks hidden deep in James room. She pulled them out and we started to look through them. The notebooks were full of hand draw porn and sketches of women and cartoons having sex. The binder was full of printed full of colored images of the same thing but with much more detail. Some of them we in the form of comics and many had text bubbles from the drawings say horrible things.
I was completely lost. Our kids have been drawing pornographic pictures like a hobby. What made it even more shocking was that my sister pointed out some of the characters in the drawings. There were pictures of kids having sex with the women but the kids looked a lot like Kevin and James. They must have been inserting themselves into the drawings but WE WERE ALSO IN THEM. They drew pictures of us having sex with them in so many different ways, making us look like we liked it and just so perverted. She showed me a name that kept appearing on the pictures and we looked it up and it took us to a lot of websites with either the same or more art that our kids had drawn.
We have been looking into this for the past two weeks by going through their phones and computers and spying on them when they think they are alone. They post pictures online on a site where people who like their pictures donate money through them and have a paypal account where they keep all the money. They make about $580 a month but we have no idea how long they have been doing it. They talk on their website as if they are one person who is an adult. We both pretended to be watching a movie but were peeping into my son room while they were “Playing”. My son was on the computer drawing more pictures and James was on the bed masturbating to my underwear. We saw this multiple times, James draws on paper and Kevin scans them on the computer and puts colors on them. We put a microphone in there rooms and overheard their conversations. They've talked about how much taxes they expect to pay, ideas for more drawings, but their own personal conversations as well. They know more than we know about sex from position, tastes, fetishes and reproduction but they also talked about us. They talk about what we look best in, what ways they would want to have sex with us and acts they have committed on. They have been planning to save their ejaculation in a freezer we have in my basement that never gets used and sneak it in our food. It seems they have done this before. We checked the freezer and they have two containers with their semen in it.
When we looked through their search history we found that they have been looking into other things children their age don't normally do but at least we can approve of this. They have been doing a lot of research on how to save for a house, what field they should go into and how to open up a business. It seems they want to make a future with this as they are trying to go to school for computer science but want to keep doing art as well without a degree.
Despite all this I feel a small amount of understanding to this. The kids are not being bullied at school but they don’t get to to hang out with a lot of the other kids. They must have limited experience with girls but we are still not sure when and how they were exposed to porn. Even with the kids hiding all this behind our back, the drawings they make of us, the conversations they have about us and even the act of mixing our food and drinks with their semen, we are not mad. We are concerned and scared for our kids and want them to understand what they are doing but we don't even understand. Only James has a father. He is extremely strict but he is not a bad person. He is also extremely religious but my sister makes sure that he doesn't force James into Christianity unless he chooses to. Kevin and I live alone as his father left before he was born. We don't want to involve my sister's husband.
Basically our children have known about sex porn longer than we thought and have been making sexual art online and getting paid for it. They have sexual desires for me and my sister but we think they may just be going through a faze until we found out they have been putting their semen in our food. We want to help them but we don't know how to deal with this all at once.
The only thing we have really considered is that we want them to see a doctor but we don't want them to be in trouble without us knowing what we want to punish them for. We are not mad that they have sexual desires for us as they are exploring their sexuality, although that is a big stretch for what they do with our food. We are proud that they have been making money on their own but what are the legal ramification of making art where a child and woman are having sex. We are fine with them making money but we are worried they will have a bad understanding of a dollar if they have this much at a young age. They have such a great talent and we don't want to ruin it by rushing into things. We are planning on having the talk for real this coming Monday so we are preparing for what we have to do but we feel we aren't ready for it.