I don't have children, nor little sisters, so I guess I'll be more objective on the matter?
Nah, not really... I don't think we can set an age limit as such on dancing, especially as we agree that each individual case should be treated separately. I don't mind kids taking classes, and I find it especially cool if they get to do that together with their mothers. But when it comes to performing, I prefer them to wear more covering costumes (I actually prefer the grown-up dancers do the same :P) and dance folclore styles. To be honest, I think folcloric is much more fun to learn at a younger age anyways. And in the longer, more philosophical perspective, think how good knowing folk styles will influence their dancing in the future..
The sad thing is that just as beauty is in the eye of the beholder, so is perviness... so it isn't just how we have kids perform, but also where... Haflas among your own are fine, performances to the open public are already in a bit of an uncomfortable zone...