I want to make one thing clear: being transgender is not a fetish. Some people may fetishize trans people (which is why there is a genre of trans porn), but being trans is not inherently sexual, nor is talking about gender or sexuality, or supporting teens who are questioning their identities or writing about those things. Supporting LGBTQ teenagers, acknowledging the existence of gender and sexuality, and writing or discussing LGBTQ stories is not grooming, and is not what is being discussed here.
When you say "literary content," I think you are imagining something very different from what happened on those message boards. Perhaps I was too ambiguous by not being explicit about the details, but I wanted this report to be as family-friendly as possible. Here are the details as I know them, from my research across various sources:
The website that these children were being funneled to was an 18+ fetish website where adults made erotica about "ageplay", adult diapers, and roleplaying as babies in a sexual way. It was a fetish website, and the adults involved were grooming (I use this word unambiguously) the teens to participate in their sexual roleplay. It primarily involved "literary content" -- stories about this fetish content. That does not make it appropriate to involve children in sexual roleplay, erotic writing, etc. (I am unaware of whether the website also involved images.)
Those are the facts as we know them. Encouraging teens to write erotica with adults is, at a bare minimum, child sexualization and exploitation. Other than direct quotes from the board and the complainants (including the teens themselves), I used the word "grooming" exactly once in this article, in a summary of the accusations.
Questioning the legitimacy of the issue over the fact that the word "grooming" is being co-opted by bad actors elsewhere deflects the issue entirely and makes it about semantics. What happened here is not okay, whether you call it "grooming" or not. Children (aged 13-17, and possibly younger) have come forward with evidence demonstrating inappropriate behaviour, and Nano HQ did not protect them -- and, in fact, ignored and covered up their complaints. That is a safeguarding nightmare, regardless of what you call it.