True enough. One can't be both liberated and conditioned by thoughts at the same time. However some of the words you are using here such as 'eliminated' and 'halt' are probably the wrong type of words to use if you are talking to someone on the varjayana path.
I think people often throw around "Vajrayana" as an excuse for behaviour they enjoy and don't want to give up.
How many people on this thread arguing that sex is alright for them because they're doing Vajrayana are saying that really because they believe and have verified this for themselves? How many are just trying to justify the fact they enjoy sex and don't want to give it up? We tend to defend, justify and promote the activities we enjoy. This is just attachment and craving rather than wisdom.
But as we know repressing or trying to eliminate sexual feelings can lead to a lot of imbalances which are surely not healthy. Other people have enjoyed sex and had healthy and fulfilling sex lives. Telling these people that sex should be eliminated from their lives can be quite a task. Asking them to bring thoughts and experience of sex to the path is easier.
I think that's largely a western idea to be honest -- that if you give up sex you'll turn into a neurotic basketcase.
If you're in a culture which thinks renouncing worldly desires is a noble and worthy task, then maybe the peer pressure ensures less frustration as opposed to living in a hypersexualized culture where such things are considered abnormal and unhealthy.
Celibacy is just a name we give to the letting go of the content of thoughts. It's more of a principle - the principle of non-attachment.To be celibate but to be conditioned by thoughts of celibacy isn't the real celibacy. Or to be celibate in the hope of eliminating and halting all thoughts and actions related to sex isn't going to happen.
It is quite a mechanical process actually: if you have desires for sensory objects, you will be reborn and continue to suffer.
You might say realization of emptiness remedies all that, but then according to Nāgārjuna in order to realize emptiness one needs mental stamina cultivated through mastery of dhyāna. One prerequisite for mastery of dhyāna is abandonment of desires. To realistically comprehend the formless and form realms you need to actually experience those states in sustained meditative concentration, and such an attainment requires abandonment of all desires, in particular sexual desire.
If you do not realize the form and formless realms, you cannot understand the suffering such states entail, whereby your compassion for beings in such states is limited to intellectual speculation.
So, again, in order to really attain wisdom and compassion, you need to abandon desire. Having a sex life of any kind is not conducive to the elimination of desire.