I find the holographic rights issue to be really fascinating.
It's a slippery slope and a real messy moral issue. At what point do you recognize AI sentience?
Society is beginning to debate the same question now with regards to animal intelligence. We're learning that many animals are more intelligent and self-aware than we've suspected, and there are movements underway to get certain species recognized as nonhuman persons with the right to be free from captivity and experimentation. The first such effort succeeded just last month with
a captive orangutan in Argentina.
So we're moving toward establishing a gradation between "human" and "animal/thing" -- an intermediate category for entities that aren't entitled to full membership in society and voting and property rights and such, but are entitled to basic habeas corpus rights (i.e. freedom from being owned or held in captivity) and protection from mistreatment or killing. In other words, something like the status of human children. In cases where there's any uncertainty at all, it would probably be best to default to putting an entity in that category, rather than defaulting to the "okay to own, mistreat, or kill" category until proven otherwise.
I'd be afraid to use holograms in their world once this issue came out for fear of doing harm to a sentient being... The possibility of more sentient holograms should cause for serious changes in how the Federation handles holograms, to make sure that they can identify when a hologram goes sentient and to protect their rights, so you don't have sentient AIs being tortured or prostituted out for entertainment. Most holograms of course would never reach sentience, but where do you draw the line?
The thing is, I'm not sure that's really a risk. I doubt a holographic character being "tortured" would really feel pain, since it's really just a computer program animating a forcefield construct to mimic the behavior and reactions of a corporeal being. From its perspective, that would just be roleplaying. It would be possible to cause it to suffer by doing something to damage or disrupt its program on a software level, or by tormenting it psychologically (see "Latent Image"), but it probably wouldn't experience any real suffering if you, say, stabbed its holographic "body" with a knife or set it on fire. Even if it mimicked the appearance and behavior of a person in great pain, that would just be a perfomance, a shadow-puppet show.
Same with prostitution -- whatever is done to a hologram's "body" is just an illusion. It probably wouldn't experience the physical sensation the same way we do, even if it projected the illusion of doing so. After all, its body is just a hollow shell of forcefields, with no hormones or blood flow or anything going on inside. There's no way the experience could be the same.
Anyway, I'm not sure prostitution would be all that exploitative in the future. I hear that even today, the job of pimp is starting to die out as more and more sex workers become their own managers, using the Internet to find clients. If that's true, it means there's a trend toward less exploitation in the industry, more free choice. And of course in the Federation's moneyless economy, there's no incentive to go into sex work except by choice.