I have never played the bad guy in a game where it's available to me. But, the ability to kill kids makes the game more immersive when you can kill pretty much every other living thing in a game.
The ability to anally conquer all the little boys in town is also realistic if that is what you are into, but it's not the same thing at all. For instance (cover your eyes if you don't know what reality is and I'm about to take away your innocence), kids die everyday. They fall off cliffs, get hit by cars, starve to death, get beaten to death, die of cancer, die of AIDS... essentially, it's a trait of living things and children are no exception to this. I'm not for murder fantasies of kids. But if I'm being attacked and in the act of self defense I can accidentally strike my horse dead, why not kids?
The problem for me is that it being a moral issue (which actually means in concerns you specifically and not all of society), we should be left to decide for ourselves. So, the annoying bit is where they make the decision for us. It's the belief that given the choice, we would choose to kill the kids for fun. If they didn't want to break the immersion, they simply do not put kids into the game. It's that simple. When you are galavanting around Skyrim, being attacked by dragons, wolves, giant spiders, undead things, wizards, vampires, etc., you are not going to all of the suddenly stop and say, "wait a minute, where are all the feral children I should have to fend off".
When I had beaten Fallout 3, and was just running around, I took that perk that made you explode in a nuclear explosion, for fun. I would then walk into a town proceed to piss off the townsfolk and wait till my health dropped low enough for mushroom cloud mode. It was annoying finding survivors of my sorry radiation induced accident. It then became no fun. It would have simply been better if children could have been killed, but their bodies immediately disappeared, we could even pretend the little darlings got snatched up by god and taken to heaven.
Edit: This whole argument comes from the logical fallacy that children are a more important form of life than adults. It's not true in terms of value or worth. It is literally the same thing to kill a child as to kill an adult.