The itch.io FAQ page that these standards are coming form says "The following is a non-exhaustive list of prohibited themes present in card processing networks. We are unable to support the sale of any works containing these topics:"
It says containing. it makes no distinctions based on context. The problem is that when a policy is this vague. Will they be abled to the bible probably not. It massive work that many would defend but the fact of the matter is that it could be ban under this new policy.
When people ban inappropriate works, they expand the define of inappropriate to anything they don't like. Censhorpship doesn't stop at what you dislike
Your argument that no moderation can ever be perfect misses the point. No legal system can ever be perfect does that mean we just abandoned laws entirely. No, we find the problems in the laws and make them better. This is a bad moderation policy that in its current form has tons of problems and people and groups like collective shout are only going to push to make it broader.