Generating a fake CP image as a "lesser of two evils" is frankly abhorrent.
Completely the wrong mentality with which to go about addressing CP.
Technology and its advances should be welcome in addressing the problem:
in so far as catching out and shutting down pedophile rings, the use of big data to identify potential pedophile, etc. Additionally, advances in our understanding of the psychology of the pedophile, and our criminal justice system, would be further steps forward in attacking CP head on.

1) Should DN software be used to create a CP image from an existing image of a child, it is still a horrific assault to that child, and indeed human being's dignity, an infringement of their human rights.
2) Even if the software is used on a potential fake image of a non-existent child, it increases circulation of CP further, could create further demand for this perversity, normalises it etc etc.
I mean seriously, how can we expect to live in a society in which producing fake CP is okay?
The argument that it is somehow lesser than two evils, because it doesn't directly traumatise a child, is superficial - who knows what the consequences of the ability to generate fake CP could be? I would hate to live in a world where this is okayed.