For me it was a test for how crazy you are or how badly game broken you.
My first instinct was to kill everyone and when I couldn't I felt like developers where pointing with this that I am crazy bastard :D
In some way it felt clever, because it they allow me to slaughter everyone I wouldn't reflect on this.
This way it felt provocative, while if they allow killing children it would feel just obscene to most people.
I know this is an old comment but I just gotta say something regarding this. Thing is about Postal, the game was obscene as it was, killing kids or no and Postal 2 was the same. But fast forward to Postal 2 and they take it even farther, You can go apeshit on peace officers, gays, Middle Eastern stereotypes, asians, blacks, women, vegatarians, "family values" advocates, rednecks and more............... but not kids. Why was that? Was it because it would be obscene to most people? Saying that implies that those you can go apeshit on isn't obscene. Doesn't quite make sense when you look at it from that angle.
Personally, I think if children were killable in these games, RWC would have crossed a line where media outlets will end up whipping up the child fetishist masses into a frenzy to the point the devs would be targetted for harrassment attacks, death threats, vandalism, law suits and so on. It's my guess that the devs at RWC just don't want that kind of attention, plain and simple :)