Disclaimer: I've tested it extensively; the children are immune to all kinds of damage, from firearms, energy weapons, explosives, and melee weapons. Attacking them DOES turn them all hostile, so they'll flee, and you'll have numerous very, very tough dogs come to fight you, who can and do die to explosives and energy weapons, but the children? Immortal, the lot of them.
It seems kind of silly to me that they set it up so that you'd have all the freedom you want, except the one thing you -really- want to do. You could go and sell people (including children) into lives of slavery and torture. You can go and double-cross every person you come across, and generally act as a horseman of the apocalypse come true. But you can't wipe out the town full of children.
Let's compare this with another thing you are very, very clearly allowed to do.
You can detonate the bomb in Megaton. Mild, mild spoilers, I guess, but if you so choose, you can blast that little town into glowing, radioactive glass and dust. Think about, for a moment, what that actually means.
You're firstly killing a bunch of people. You're secondly ending Vault 101's hopes of trading outside the vault, should they ever choose to leave. You're vaporising a massive trade hub; disrupting a struggling, though growing economy. Possibly so badly it may never recover. You'll be dealing massive, massive psychological trauma to everyone around who sees the blast. And finally, you'll be seriously irradiating the surrounding land; rendering Vault 101 access nigh-impossible for those without radiation-resistant gear. And there isn't much of that around the Waste, you'll find.
...but they won't let you kill a couple brats in an underground cave who noone's ever heard of. Seems a tad off, don't you think? Someone should re-evaluate their priorities.
I realise why Bethesda may have done this, of course. To pass the censors. To save themselves from massive, -massive- controversy and protests from kids' and parents' groups all around the world. They may have been unable to even release the game, had they allowed for freedom.
This strikes me as odd, and slightly saddening, because in real life, you can in fact go and slaughter children if you so choose. There just happen to be more readily enforced consequences.
Could you imagine the sheer volatility that would be unleashed were the next GTA game to feature a primary/elementary school full of kids? Man, that'd be awful to see.