As a mod I'm supposed to know, but to be honest I'm not 100% sure myself.
I've seen pictures get deleted or let go, depending on who gets to it first.
I thought blurring out an underage person was ok, but if too much was in the picture it was deleted anyway.
Just lately I err on the side of caution and delete the image. After all, if it still looks underage, it shouldn't be there.
Reports are dealt with by whoever gets to it first. If a mod lets it go I won't overrule their decision, I'm too far down the food chain to do that.
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