I started to respond to the main thread but was too sleepy (thus I'm doing it before round two of the days light work out, showering and sleeping so I can get up and catch a plane in six hours). In addition to the classic legalization arguments (which I generally support, with some reservations for physically addictive drugs) I'd stress the vital need for oversight and regulation in any such approach. Not to minimize the danger of unreported rape (though, realistically, you'll play hell proving a prostitute was raped; it's not right, but defense attorneys routinely allege promiscuity to impugn victim credibility already), but if prostitution were legalized without regulation STD transmission would like increase dramatically. Condoms aren't perfect, and there will always be plenty of prostitutes who can be convinced to skip them if the price is right; money, even at the risk of ones health, is the name of the game, after all. In a lot of ways the ability to regulate prostitution is one of the biggest arguments for legalizing it, because it ensures ample availability of prostitutes who are not only healthy, but have documentation of regular medical exams verifying them as such. That protects both them and their patrons by significantly reducing STD incidence and providing early diagnosis and treatment when it does occur. Best of all, rather than the general taxpayer burden illegal prostitutions healthcare costs currently create, the cost of preventing and treating illness related to the sex trade would be paid by direct government taxation and fees on it.

Drugs are somewhat more complicated (for one thing, the issues are less serious with non-addictive drugs and/or those with relatively minor withdrawal symptoms), but many of the same factors are present. Drug dealers are infamous for cutting already harmful drugs with less expensive but often far more toxic fillers. American drug companies did the same thing by using anti-freeze as cheap sweetener in cough syrup, prompting creation of the Food and Drug Administration that ended that practice (though it's worth noting that the general influx of cheap Chinese manufactured goods has revived it, largely because the FDA can't deal with the volume of imported over-the-counter drugs). Government regulation and licensing would guarantee the purity of recreational drugs and make them far less lethal, just as with non-prescription medicine.

Legalization would also greatly diminish crime, but, once again, only in the presence of government oversight and regulation. While legalization would dramatically lower the financial cost per dose of abused drugs, by itself it would not necessarily lower the total cost. Most drugs are physically addictive and addiction is progressive, the basis of theft and robbery associated with them. Excessive and increasing drug abuse can't be sustained on a normal salary, and physical deterioration from drug abuse can make keeping a job difficult or impossible (as can oscillating between being too high or too strung out to work). Regulations supplying maintenance doses to functional addicts would do much to eliminate addicts desperate to get their next fix by any means necessary, which simply legalizing their drug abuse could not do by itself.

More simply, it's not enough to simply legalize prostitution and drug dealing so we can tax the hell out of them; like most commerce, some government oversight and regulation is necessary to prevent exploitation and ensure safety. If prostitutes required licenses that in turn required regular medical exams most of the dangers and social ills would become minuscule. That won't address things like infidelity and rape, but those are problems with humanity, not prostitution itself. Likewise, if drug dealers required licenses that in turn required them to sell only government inspected drugs, and if a social system was in place to ensure addicts got treatment as well as maintenance doses to prevent dangerous withdrawal symptoms and the crime they motivate, most of the problems associated with drug abuse would be greatly diminished, too. Regulation and infrastructure for both trades would be provided by taxes and fees assessed on them, and thus the cost of each trade would be born entirely by its participants rather than society as a whole. It's no coincidence that those places who've had the best results from legalizing/decriminalizing drugs and/or prostitution also heavily regulate them. Legalizing, or at the very least decriminalizing, drugs and prostitution is a good idea, but ONLY if accompanied by large scale regulation and oversight.