When Pauling was caught by the Department of Internal Affairs last year, he was charged with three counts of possessing objectionable publications.
Initially, he said the transfer of some objectionable files to his electronic devices had been "accidental" and some made him feel sick.
However, Pauling admitted he got sexual gratification from the online conversations.
Judge Kevin Phillips said the use of the female alter-egos began in 2011.
By 2013, Pauling was discussing sexual matters online with 13-year-old and 16-year-old girls.
They talked about incest and the defendant encouraged the younger girl to have unprotected sex.
In total, the authorities found 56 illegal files.
The judge said he had viewed some of the images and described them as "appalling" and "disturbing".
"The faces of the children in the photos depict how victimised they have been," Judge Phillips said.
Saunderson-Warner provided letters to the court from Pauling's mother - who attended sentencing - that described her son as "a good kid".
Family friends expressed a similar sentiment and the man's employer described him as "honest and hardworking".
But the judge said that had to be viewed against his prolonged offending.
He questioned whether sentencing Pauling to home detention in the Dunedin home where he committed the offences would be of sufficient deterrent.
But by a "very very narrow margin", Judge Phillips decided against a term behind bars.
"I don't think you have the maturity or the background where you would survive in a prison environment," he said. "I think it would destroy your mother."
While on home-detention and for six months afterwards, Pauling is barred from using electronic devices or associating with children under 16, unless approved by probation.
He was told to do a rehabilitation programme and the judge ordered the destruction of his laptop, cellphones and storage drives, which he had used in committing the offences.
Pauling was also sentenced to 200 hours' community work.
