If there are children (and there should be, if it should feel like a living world), then they should be killable.
Killing children in Fallout for example made you a child killer, which was frowned upon everywhere of course and so many people didn't like to interact with you and that's how it's supposed to be. Doing bad things should have really big consequences. Fallout was even a bit tame, imo. If you kill a child, you should be pretty much screwed, unless you want to fight townspeople whenever you enter a town/settlement. Every moraly normal person should be out to get you (maybe even something like a bounty on your head?), while groups like bandits and the like shouldn't care much about that, hell, maybe even welcome you into their ranks for it.
Children are definitely no must-have, though. There are tons of games without children like the GTA series and they still show a pretty realistic world.