I would never characterize all young performers as "novelty acts", or assume that they (or their parents) are just ego-feeding. Judge each case on its own merits. If you have an open mic, one set of rules should apply for everyone.
One question that I have is about accompaniment. Does the child sing without instrumental accompaniment, does he/she play or does the dad drag in some form of recorded accompaniment? I find the first two acceptable, but have employed a "NO KARAOKE" rule to eliminate people who use taped accompaniment.
Children are people, too, and deserve the same consideration (and should be measured on the same scale) as anyone else.