I drive past Thomas Bowdler's old house (now a rather run down multiple occupancy university student let) every day, and I work close to the cemetery where he is buried, so that makes me especially qualified to pontificate on this subject.
The dubious legality, and the intellectual property rights issues of the Clean Reader thing should not be seen as variable depending on one's views on profanity or obscenity in literature, and it is also not dependent on artistic outrage at the very idea. The legal aspects of this piece of software are quite separate from the protection of minors or sensitive individuals from offending material.
I am curious how it will deal with the Oxford English Dictionary. Back in the old days of the 1970s, we used to get the giggles looking up rude words in the dictionary in the school library.
My view is that Clean Reader sort of misses the point of the exercise anyway, a bit like violent TV or film, full of guns, death and explosions, which feels the need to censor the odd bit of nipplage. The subversive or disturbing elements of fiction are much deeper than some rude words, as others have already pointed out. Profanity for its own sake has little merit, but used well it can be effective and sometimes very funny.
Bowdler (who took the rude bits out of Shakespeare, and the orgies out of Gibbons) is now regarded by most as an amusing historical curiosity, an example of the pre-Victorian moral neuroticism of some sectors of British society at the time (not mirrored by a large portion of the contemporary London cultural establishment.) And this is the point: the Clean Reader is a Cultural Phenomenon. It is probably irrelevant to the views much of North America, and from the European side of the pond it will be likely be regarded in much the same way as Mr Bowdler: not relevant for the majority to juvenile or adult cultural life in Europe in the early 21st century, and just another slightly baffling divergence of US culture from that of much of Western Europe, up there with Hershey bars.