I would assume that it's because they weren't sure what it would do to the brain that tried to run it.
Regarding mental sex; yes, it can be done. Like your friend, I'm not sure exactly how it works, but it does usually involve orgasm, AFAIK. I'm not certain I believe in telepathy of any kind, so I tend to think of it in terms of subliminal messages sent by subtleties of body language, ect., and augmented by mental self-stimulation. Bear in mind, there is a small percentage of the female population, and an even smaller percentage of males, that can achieve orgasm simply by thinking about it, it's called "thinking off". As to whether or not these individualls are more capable of the kind of "mental sex" we're talking about here, I have no information. I would imagine that they are, however.