I would reporthim.I do not go so far as to believe anyone who likes to look at pictures of children,is a potential danger to them in real life situations.
BUT the fact is if this guy is one of the minority who is a potential danger, then we should do anything and everything in our power to make sure it does not happen and that would include reportin him to the chat service.I know he is not someone you know personally but imagine if he was convicted of a related offence and you found out it was the person you had once spoken to on the internet...#
also, as you said...peodophiles are majorly hated, and every 'normal' person knows that..the fact that he is willng to discuss it openly is worrying.
just my two cents!