Censorship in games was an odd thing back in the day. Particular over in the UK where they used to rated under the same system as movies by the BBFC. Recently we made a switch to the PEGI (Pan European Game Information) system which wasn't "the law" until a few months ago.
Certain things can up a games certificate depending on its depiction and whether it's a main feature or not. Consider this, Perfect Dark for the N64 was given an 18 rating by the BBFC (equivalent to an M rating in the states) for violence, blood and language. Now, looking at the game, there is very little blood splatter, granted the violence is up there coz you are killing humans but it is in a fantasy setting and the strongest word that anyone says is "bitch" which is pretty tame by today's standards of curse words. Compare that to say COD4 which is rated 15 and that has more realistic graphically, more bloodshed, more coarse language and depicting battle scenarios that was very close to human affairs both past and present (at the time). Logic there somewhere?
I think generally if the is only the odd occasion of something bizarre or not exactly child-friendly in a game, it doesn't normally sway the certification that much. So that blood gushing from Banjo's neck is a glance over coz it's not a big feature of the game hence why it can remain within its E rating. Other stupid things like killing humans against killing say zombies or aliens, that again will sway the rating. Believe it or not, the colour depiction of blood can be the difference between an E and say a T or even and M). If it's red, the rating goes up, if it's any other colour, the rating is reduced. It then depends on how much is spilled and how it is portrayed on screen. That's why Zelda: OOT got away with a lesser rating. That being said, under today's rules, over here Zelda:OOT has gone from being unclassified in 1998 (i.e. suitable for all) to a PEGI "12" (teen). The way of the times I guess.
@ Nintendoofah64 - the red you see when you fall into the water in Bubblegloop isn't blood, it's the piranhas biting your feet. Or at least I'm sure that's how they would have explained it to the censors to keep the E rating. Again, it's all open to interpretation.
Also, I don't get the Rio snapshot. What's so bad about that? It is not just a band around the toucan's tail? I don't see anything wrong with that picture. Is it the positions they're in? Coz if that's the case, you can't openly say the developers did that on purpose. Again, interpretation. Could it be that you're reading into it a bit too much?