I'll let Activision community manager Dan Amrich explain the situation...

This divides COD players into two camps: The people who want to create penis swastikas and the people who do not want to see them. I hear from both of them, complaining loudly that they should be able to create whatever they want and/or these people should be banned. Are you suggesting you are enhancing my game with your Nazi symbol made out of wangs? You are not. You have my guarantee on this.

Yes, penis swastikas are really a big problem with emblems in Call of Duty: Black Ops II. People really confuse me sometimes...