The reason why Custer's Revenge had to be rated adult and prohibited from children isn't because it accurately depicts human anatomy, but because it simulates the act of rape. I don't know if people were turned on by it or not, but if they were it wasn't because of the graphics but by the act itself... some people like rape and are turned on by it and would have enjoyed that regardless of the quality of the graphics. Just like how people can be turned on by erotic fiction, where its only text but it describes things that arouse them. And of course, in the Atari 2600 days blocky graphics were all that was available so you made due.
But the main appeal of the game was most likely because of the controversy surrounding it. The game was crap in all respects, but it managed to piss off a lot of people and whenever you have controversy like that you have people drawn to it like a moth to a flame and that's probably where the bulk of the sales came from. Some company could create a Terrorist simulation game where you play as a terrorist and hijack planes and fly them into buildings, and of course that would piss off people. Glen Beck and O'reilly would be ranting about it and there woudl be protests against it, but that would make people aware of its existence and it would sell on that basis even if the gameplay was as terrible as Superman64.