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By this logic, we can watch anything and the actor can do anything, as long as the audience and the actor know what's right and what's wrong. Hmmm...
If that is the case, then your real issue is level of sin. That sounds like a slippery slope of justifying sins by their level. But our Lord says that he hates the lukewarm.
If he knows it's a sin, he shouldn't do it. I got into this inadvertantly with an old roommate who got mad at me for turning off Sister Act II while I was babysitting some kids she had me watch for her. A "bad guy" character blasphemed! He said our Lord's name in vain, even as an explicative. Her 'argument' was that the first movie was OK, so this one should be fine. I quickly dismissed that argument. Then her next excuse was this was the bad guy doing this. The point though, was that this was making the children desensitized to the sin, never-the-less (besides the fact that this was supposed to be a comedy). There was no consequence that could possibly be shown (nor does the story even attempt it) to what actually becomes of a person who blasphemes and does not Confess it before his death. Another point is not only the desensitizing to sin, but the actual leeway you give to bad spirits to infect a home where sinful things are shown for entertainment's sake. This argument in defense of watching sinful things as entertainment, in it of itself, is usually both a symptom and a sign of the cardinal sin: the vice of sloth (in this case, spiritual sloth). They aren't things that should be practiced, that is, presumption on the grace of God. Rather, these are entertainments that should be avoided.
Watching The Passion is much different, but even that, it is not the same thing as a spiritual meditation. While one can meditate, to a point, on the Passion of Christ while watching The Passion, even too much of watching this violence, for example, might desensitize a person to the violence. The violence itself can take on a spirit that overshadows the meaning and significance of the suffering of Christ. But even this movie is different plainly because it has a direct significance to spiritual realities, whereas worldly entertainments have little to absolutely nothing to do with authentically spiritual matters. If they even touch upon them, they are usually utterly misleading.