Does This Already Exist in Japan?

Japanese art has a long history of pornography. Naughty tentacles is a trope that goes back to about the 16th century. Much of modern Akihabara is a playground for the perverted. In that perspective, being able to make a paper penis and matching vulva/clit is pretty tame.

And unless you start playing with these like you did your Barbie and Ken dolls, it is far less creepy than owning a RealDoll.