I too became curious about this legend as Buddhism, in particular, argued that the ultimate truth can be discovered only by those who awaken to the reality of desire and are able to transmute it. With the development of the Mahayana, the underground 'transgressive attitude' got official affirmation. Since emptiness implied the non-existence of sin and Two Truths implied the identity of desire and awakening Zen Buddhism could both repudiate and affirm desire while Tantric Buddhism could claim that “the energy of the passions is the necessary catalyst of awakening”. And this is what I gathered about Vasumitra.
In the "Gandavyuha Sutra" the last chapter of the Avatamsaka Sutra, one of East Asian Buddhism's most important Mahayana texts, we can read the story of the young Buddhist Sudhana as he seeks enlightenment on a pilgrimage that leads him through a sequence of 52 different masters. The twenty-fifth of these is the courtesan bodhisattva Vasumitra, from whose seductive powers, Sudhana must learn a lesson. In the Avatamsaka Sutra it is written: People in Ratnavyuha, the city of Vasumitra, who did not know of Vasumitra's virtues or the scope of her knowledge, said to Sudhana, "What has someone like you -- with senses so calm and subdued, so aware, so clear, without confusion or distraction, your gaze focused discreetly right before you, your mind not overwhelmed by sensations, not clinging to appearances, your eyes averted from involvement in all forms, your mind so cool and steady, your way of life profound, wise, oceanic, your mind free from agitation or despondency -- what have you to do with Vasumitra? You should not have any lust for her, your head should not be turned by her, you should not have any such impure thoughts, you should not be ravaged by such desires, you should not be under the power of a woman, you should not be so bewitched, you should not enter the realm of temptation, you should not sink into the mire of sensuality, you should not be bound by the snares of the devil, you should not do what should not be done."
Others, however, urging Sudhana to seek out Vasumitra, provide directions to a house that in its greatness resembles a castle. There, he sees her:
There he saw Vasumitra, who was beautiful, with golden skin and black hair, her limbs and body well-proportioned, more beautiful in form than all celestial and human beings in the realm of desire, her voice finer even than that of the god Brahma.
Vasumitra tells Sudhana:
"All who come to me with minds full of passion, I teach them so that they become free of passion."
She then adds:
"Some attain dispassion just by embracing me, and achieve an enlightening concentration called 'womb receiving all sentient beings without rejection.' Some attain dispassion just by kissing me, and attain an enlightening concentration called 'contact with the treasury of virtue of all beings.'"
This woman was settled in a polluted, fearsome realm, making it hard for people to believe in her; so the land was called Danger. By means of meditation, she entered into defiled realms and turned them all into spheres of knowledge; by virtue of great compassion, she remained in the ordinary world, and by virtue of knowledge she remained unaffected, so her city was called City of Jewel Arrays.
Her compassion and decision to remain in the ordinary world and lead others to enlightenment is, of course, characteristic of the bodhisattvas of Mahayana Buddhism. The commentary tells us how she leads others to enlightenment:
Vasumitra went on to speak of holding her hand, getting up on her couch, gazing at her, embracing her, and kissing her. Holding her hand means seeking salvation. Getting up on her couch means ascendancy of formless knowledge. Gazing at her means seeing truth, embracing her means not departing from it. Kissing her means receiving instruction.
This illustrates how all who come near enter a door of total knowledge, unlike those who only seek to get out of bondage and do not arrive at the ultimate dispassion -- supreme knowledge of the real universe that remains in the polluted world without being defiled, freely helping the living, neither bound nor freed.
In the end it is not clear whether Sudhana actually slept with Vasumitra or not. But one thing is clear- one can achieve dispassion by an encounter with passion and thereby attain fuller enlightenment.