I accidentally discovered you can easily animate the genitals. I was trying to figure out what mod was changing my idle animations, so I made a mod of the vanilla animations to see where the overwrites were. While doing this, I found that the CBP.ini I was experimenting with to animate the genitals suddenly worked perfectly. So if you overwrite the skeleton.hkx file with the base game (unedited) version (or hide it in MO so that it isn't loaded), you can assign the bones and animate them using CBP and it totally works just like in Skyrim.
I don't understand why this works, but it does. I'm not sure what issues this might cause, but it's totally fine if you just use Atomic Muscle as a body replacer. I think it probably wrecks sex mods, but I haven't tried them so I'm not sure.
One other quirk is that I could only get the first 2 bones of the penis and the scrotum to animate. So the animation only really looks good with an erect or semi erect penis state.
This is the .ini i made for reference. It has full body jiggle and penis and scrotum physics. Just remember the genitals won't animate unless the vanilla skeleton.hkx (NOT skeleton.nif!) loads with highest priority.
cbp.ini