Frankly, I don't see any problems here. I mean, take Bioshock. The player there had the option to forcibly remove the vital organs of up to eighteen orphaned girls, causing them to die horribly, for profitable purposes (by ripping out their vital organs, you can now shoot bees out of your hand.)
As far as the whole "kids lives are sacred in this game" thing - well, we've known for several months now that YOU CAN NUKE AN ENTIRE TOWN, presumably killing every man, woman, and child around. How is that more valid than shooting a kid in the face? Because they die 'offscreen'?
How about this - just give the kids guns! What post-apocalyptic family wouldn't train anyone and everyone capable of pulling a trigger how to defend themselves? And if that little kid starts taking pot-shots at you, would you still think that all their lives are sacred and all that?
I think that stuff like this sets a dangerous precendent in the opposite direction - we start thinking that kids are invincible and that even though they may get a couple scraped knees and bruises, it's not like they'll die. Now think that, next trip you take to Darfur.