I think having them kneel down hurt would be enough. I know I'd like to knock some sense into that little ***** in Whiterun, but there's no need to kill her for being stupid/arrogant enough to pick fights with everyone she sees, is there? The guards might want a word with me for doing what her parents should have, of course.
The only time I can think of where you probably should have been able to kill kids was in Fallout 3's little lamplight. Of course, that wouldn't have opened the gate, I suppose. Nor would 15 grenades, for unimportant reasons.
EDIT: About the immersion thing, I'd have a hard time staying in-character as the kind of person who would kill everyone, man, woman, and child, leaving no one to sell loot to, no one to buy lockpicks from, no one to pretend are my subjects if/when I find a crown or find myself in a high-ranking position, the reason for not killing everyone in the magic college when I'm archmage, if that makes any sense. I'm not sure how one would go about playing a town-slaughtering beast and still be able to do anything else. Who could you take quests from if you kill everyone? I could be missing something, but this doesn't sound like an RPG as much as a monster [http://tvtropes.org/pmwiki/pmwiki.php/Main/CompleteMonster] simulator.
EDIT 2: Fuck, I forgot, I have killed kids in a game before, as a jedi, no less. It was Star Wars Episode 1 on the PS1, a certain mishap with a salesman and a badly-worded pitch led to me chopping up tattooine's citizens with my pixelated spike of a lightsaber. This included the irritating little shits that go around "Booga"-ing at you on your way to meet Anakin, who, I learned, will not agree to help you (thus not allowing for game progress) if you've killed innocents. "I'm not gonna help a murderer!" he would say, not needing to see the trail of his butchered peers I left before navigating Watto's junkyard to know I was the "no-good killer" the gammoranean guards were looking for. When I realized I had fought through the level to reach this boy who wouldn't help me, I killed him too. Rewarded with game over screen.
As far as I know, kids were butchered in a game, and not a single fuck was given that day.