First of all, great video. I absolutely loved the film The Midnight Meat Train. This is my absolute favorite Clive Barker film adaptation, and the death scenes, specifically the one you linked to, are incredible.
This film was an American made film and when made was subject to the laws as dictated by the United States constitution. What legality the film encounters when taken to other countries (like Australia) I can not comment on, specifically because I just don't know. As far as extreme graphic violence in films being legal in the US, that has always been a first amendment protection. That should be a satisfactory answer, even if you don't agree with what the first amendment protects. I don't agree to flag burings or Nazi protests, but they are too protected under the first amendment.
I'll bring up something that a lot of people here talk about that is always a first amendment issue, the wonderful (sarcastic) Westboro Baptist Church (the god-hates-fags people). These are the people that motivated laws against protesting at funerals. Why should that be made illegal while extreme violence in movies is allowed to proceed uninhibited? Well, first amendment rights, as well as all other rights, only protect actions as long as they do not inhibit the rights of others, and protesting at funerals steps beyond just simple free speech and into deliberate harassment, similar to how the first amendment will not protect you if you commit verbal sexual harassment. You may not agree with graphic violence in films, but it is protected under free speech and in no way affects or limits the constitutional rights of others.
I want to make a note about the video you have just showed us. This video is actually an edited version, cut from the original which is much more graphic and carries on for a lot longer. The reason for the change is because of another wonderful (sarcastic again) organization called the MPAA (motion picture association of america). What this organization does is give movies ratings for US distribution. As far as anyone can detect up to this point, the criteria by which movies are assigned specific ratings is completely arbitrary. For examples of this, go to
http://www.mpaa.org/FilmRatings.asp, and search for some movies. It will provide you with the movie's rating as well as the reason (content) for this rating. It seems that for nearly every movie there is a unique reason for the rating...no system, no protocol, just arbitrary nonsense. I would recommend seeing Kirby Dick's film "This Film Is Not Yet Rated", a documentary expose on the MPAA, where he exposes not only the arbitrary nature of the ratings process, but the hypocrisy and sometimes illegality of their methods. Check out a deleted scene where Kirby Dick catches the MPAA making illegal copies of his film when he submits it for a rating...the very law that the MPAA was responsible for instilling, they break, when he submits his expose to them for a rating. It may sound like the MPAA is doing the very thing that I just got through explaining was protected against by the first amendment, that being the limiting of violence in film. Actually, the MPAA has a unique loop hole through which they operate that keeps them free of censorship accusation while at the same time giving them near complete control of what a film will or won't contain. I'll explain: it is not a law to submit a film to the MPAA. This is not a requirement of any film that is made, and will simply carry the label of "unrated" when not submitted to the MPAA. The catch: if you want your film distributed into any major theaters (ie, if you want your film to make any money), your film must carry a rating of "R" or lower...this is simply the requirement of the theaters, who have free say about what they want to exhibit on their screens (as well they should have). The MPAA knows this. Which means, for films to have any chance of making money at the theaters, it needs to be submitted to the MPAA. So, if the MPAA sees a movie that they believe is too extreme (such as the Midnight Meat Train) they will label it as "NC-17" (formally "X"). Very few theaters will display a film with an "NC-17" tag. It is again, not a requirement or law for any filmmaker to cut their film to resubmit it for an "R" rating, but they damn well better do so if they want any chance of making their money back on the film. The situation changes slightly with DVD releases, as most stores will carry unrated DVDs, which is why so many films, like The Midnight Meat Train, will release original director's cuts of the films, preserving the original picture the director envisioned before it was debauched by the MPAA that, while not directly censoring films, have an extreme amount of say on whether or not a film will ever see a wide release in theaters without their approval first.
