The charge of making an objectionable publication related to Walsh filming a four-minute video of a naked prepubescent girl, they said.
During the appeal, for which Walsh was not present, defence lawyer Chris Tennet, said there should be a "distinguishment" for the fact the situation was "fake" and "there's no harm, immediate harm to a young person".
He acknowledged Walsh "dilly dallied and bit into it and did it".
"He accepted that and pleaded guilty."
Justice Dobson did not like Tennet's statement the offence was an "attempt".
"It's not an attempt. Mr Walsh should know that he completed all the elements of the offence," Justice Dobson said.
Tennet said there should be a "lesser starting point" in sentencing for offenders who were dealing with a "fictitious" person.
"He should be given credit for his good fortune that he wasn't dealing with who he thought he was dealing with," Justice Dobson said.
Tennet said the large part of the sentence - two years' imprisonment - was imposed for making the objectionable publication.
He called the sentence "manifestly excessive".
Justice Dobson noted the sentencing judge had not given Walsh an uplift in his sentence for previous convictions.
"It's not a good history, is it?" he said.
He noted that Walsh had a 1999 conviction for abduction a female for sex.
Crown prosecutor Seamus Woods said if harm had come to a young person during the sting, that would be an aggravating feature, but the absence of an aggravating feature did not make it a mitigating feature.
Woods said Walsh "demonstrated a lack of insight and did not appear to understand the seriousness of the offending".
Justice Dobson said he would reserve his decision.
