Of Interest:
Debian Jr. Project	A custom Debian distro project whose initial goal is to produce an entire linux distribution for kids up to age 8.
Tux4Kids	Makers of TuxType, they are also working on a linux distribution that will be appropriate for the educational environment.
Using Linux with Kids from 3 to 7 - an introduction	Great page with a comprehensive look at what is to be considered when presenting young children to any computing environment in general, and talks about one parents specific experiences with his 'Test Subjects'.
Setup of Linux for children	A parent talks about safely setting up a linux box to make it easy for children and keep the system safe from the curious kids (not the other way around) - he still notes the danger of cookies, however (the chocolate chip kind, not the browser ones).
Using Linux to Teach Kids How to Program	A nice little article on linuxgazette.net describing logo as a good introduction to programming and a little bit about using a logo environment in linux. A bit dated at this point, but still instructive.
Kid Sites:
Babloo	Fun site for Toddlers, Pranksters, Youngsters and Parents with 3500 pages to explore - stories, games, activities, songs, and more.
Nick Jr.	Nickolodeon has put together Nick Jr. and it's a great place for the kids to spend time with dora, backyardigans, and all their other nick friends. Heavily Flash dependent.
pbskids.org	PBS offers up pbskids.org org, with Sesame Street, Jay Jay, Arthur, Dragon Tales, and many other of their favorites. Again, heavily Flash dependent.